Research On The Biased Technology Progressof China’s Industrial Sectorwith The CES Production Function

Since the outbreak of the oil crisis in the United States in 1973, energy has been paid much attention as well as the capital and labor. Because it influences a lot on the economic and environmental processes. The research on technology progress is a good summary of a country’s economic operation. On one hand, the physical characteristic of technological progress matchesthe technology process, which can reflect technological change of a country. Because of the various factor endowmentsacross the industries and regions of China, the level of technological progress differ, and how to coordinate the development of different regions and industries is an issue that policymakers must care about. On the other hand, the directions of technology progress determin the income distribution, in particular, the sustained decline of the labor income and the enlargement of inequality of the wage gap are to direct the sustained economic growth, social stability and unity. Moreover,China is currently in the important stage of industrial transformation and upgrading, how to keep economic growth in the industrial green and low-carbon transformation process is important. All of these require a clear elabaration of the technological change of China, which deserves research incorparting the inputs of energy, capital and labor.In this paper, the optimal nesting structure of the CES production function in the industry and its sub-sectors are given after comparison. The relevant parameters of the industrial sector and the industry segments are estimated in their optimal nesting forms, the logical relation among the elasticity of substitution, the factor-augmenting technical change and the biased technological progress is expounded. Then, it constructs the quantitative calculation method of the biased technological progress of three factors(capital, labor and energy), and calculates the biased technological progress of the industry over the years with the estimate dparameters. The qualitative analysis method of the biased technological progress of three factors is given in the next, and then the biased technological progress of the 36 sub-sectors of the industry in 1990-2012 is discussed. The results show that 14 sectors are biased in favor of energy, China’s industry over the years is biased in favor of the energy, and its degree has a further deepening trend. The government must guide the biased technological progress and its trend; reduce the energy intensity and energy dependence, and the unfair distribution of social income.