Industrial Location in Chinese Provinces: Does Energy Abundance Matter?

We identify the driving factors of manufacturing activity across Chinese provinces with a particular focus on energy endowments. A model of production location is estimated, including both comparative advantage and economic geography determinants. The data set used consists of a panel of 28 Chinese provinces and 12 manufacturing industries over the period 1999-2009. Results confirm the relative importance of energy endowments. We find that larger energy endowments are significantly correlated with larger production of energy-intensive sectors. Disaggregating across energy carriers shows that coal exhibits the strongest impact. These results are robust across alternative specifications.