comprehensible. Thirdly, change in the output structure also negatively influenced the energy demand
(Fig. 3). In 1997 the secondary industry still accounted for 47.5% of total GDP while in 1998 the ratio
dropped to 46.2%. It is estimated that GDP energy intensity will drop by 0.9% if the ratio of secondary
industry drops by 1%. And finally, China is undergoing energy transition which is featured as the transition
from a user of low efficiency solid fuels to higher efficiency gaseous and liquid fuel and electric power (EIA,
2005). The ratio of coal in total energy consumption dropped from 74.7% in 1996 to 69.09% in 1999,
meanwhile the ratio of oil and gas rose from 19.8% to 24.7%, while on the other hand, the ratio of electricity
in end-use energy consumption rose from 12.2% in 1996 to 15.2% in 1999, hence the substitution of oil, gas
and electricity for coal reduced the demand for coal during the periods. To sum up, there are sound factors
resulting in the decline in coal and total energy consumption, but the quality of energy and possible
economic statistics data covered up the fact.
3.2. Unit root test
Since Granger causality tests are sensitive to the stationarity of the series we first study the stationarity
properties of the variables. If the series are integrated of the same order one can proceed with the
cointegration tests. There are a variety of unit root tests that sometimes yield conflicting results. Therefore,
in order to proceed with coint