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This study investigates the relationship between energy use and economic growth by incorporating financial development, international trade and capital as important factors of production function in case of China over the period of 1971–2011. The ARDL bounds testing approach to cointegration was applied to examine long run relationship among the series while stationarity properties of the variables was tested by applying structural break test.

Our empirical evidence confirmed long run relationship among the variables. The results showed that energy use, financial development, capital, exports, imports and international trade have positive impact on economic growth. The Granger causality analysis revealed that unidirectional causal relationship running from energy use to economic growth. Financial development and energy use Granger cause each other. There is bidirectional causality between international …