Analysis of Factors Influencing Coal Prices Under the New Normal of China's Economy

Background: After China's economy entered a new normal, the economic growth slowed down, energy market demand shrank, and the coal industry suffered from serious overcapacity. In this context, the Chinese government carried out supply-side structural reform and implemented a series of policies to cut overcapacity and destocking.Methods: By using time series data, this paper establishes vector error correction model, combined with Granger causality test and variance decomposition, to study the factors influencing coal prices under the new normal of economy. Results: The empirical results show that under the new normal of the economy, coal social inventory, oil production and natural gas production have a greater impact on the coal price, while coal consumption and raw coal production have a smaller impact on the coal price. According to the analysis, at the present stage, fossil energy, especially coal, occupies too high proportion in China's energy structure, which can no longer meet the requirements of energy use under the new normal of economy. Conclusion: According to the empirical results and analysis, the Chinese energy structure must be adjusted. In the short term, supply-side structural reform policies must be deepened to change the status quo of China's coal industry as soon as possible. In the long run, non-fossil energy technologies should be vigorously developed to provide stable and cheap non-fossil energy, thus reducing the use of fossil energy and increasing the use of non-fossil energy.