Study of the Impact of the Rise and Fall of the Coal Industry on the Regional Economy

2. Literature Review

The development of the coal industry has been the major concern of many scholars. As a pillar industry of the national economy, the coal industry experiences broad fluctuations in output value during severe price fluctuations. This leads to fluctuations in the regional economy and even the national economy. These economic fluctuations are more dramatic in resource-based regions (Zhao et al., 2011). China’s coal reserves are distributed chiefly in northern and northwestern China. The five regions including Inner Mongolia, Shanxi, Xinjiang, Shaanxi, and Guizhou hold 956.1 billion tons of proven resource reserves, accounting for 81% of the national total (Guo, 2010). Some scholars have studied different coal-rich regions, including Shanxi, Anhui, Shaanxi, and Xinjiang (He, 2013; Huang et al., 2012; Wang and Feng, 2013; Zhang et al., 2015) using econometrics and state-space models. They discussed the effectiveness, time lag of impact, and correlation between the fluctuation of coal prices and regional GDP. Regarding the impact of price fluctuations on national GDP, Ding et al. (2013) and Li et al. (2015) used data in different time periods and measured by different methods. The results of both studies indicated that there is asymmetry in the impact of coal price fluctuations on China’s economic growth. Specifically, decreases in the price of coal have a greater impact on China’s economic growth than coal price increases. However, Hou and Yang (2016) used different research methods and time period data to conclude the opposite of the above study. Their study suggests the impact on China’s macro economy is much stronger when coal prices are rising than when prices are falling.