In contrast with developed countries, coal is the major energy source
of China. In view of its importance, this paper attempts to analyse an
d forecast the country's demand for coal as it moves towards the next
century. To do this, we have applied three different methods to contra
st their performances in fitting the Chinese data: Engle-Granger's err
or correction model. Hendry's error correction model and Hendry's gene
ral-to-specific approach. It is found that the Engle-Granger approach
outperforms the other two in terms of having the smallest ex post fore
cast errors. Using the Engle-Granger approach, the model predicts that
the Chinese economy will experience a 5% shortage in the year 2000.