The State and China’s Productivity Deceleration: Firm-level Evidence

This paper documents the total factor productivity (TFP) growth path from 1998 to 2013 using both the aggregate data and the firm-level data of China. We find that the TFP growth is positive from 1998 to 2011 and then turn to flat and even negative. And careful comparison between the state-owned enterprises (SOEs) and private firms reveals that the slowing down of TFP growth of the SOEs is the major contributor to the TFP growth reversal of the whole manufacturing sector. Moreover, we rejected a possible explanation that manufacturing TFP growth slowing down may due to the sectoral factor after the decomposition analysis. 1 Stylized Facts in the Time Series of TFP 1.1 Data Description We employ two sources of data in this paper, the Chinese Statistical Yearbook and the Chinese industrial Survey. Most of the the aggregate data is downloaded from the China Industry Statistical Yearbook, including the sales income, sales cost, number of people employed, and total asset. The wage bill is from the China Labor Statistical Yearbook. The two-digit sectoral price data is downloaded from the China Statistical Yearbook. The firm-level data is from Chinese Industrial Survey (1998 2013). This dataset is widely used to study China related questions, including a seminal work by Chang-Tai Hsieh (2009). The main difference of our data set compared to previous ones is that the it has longer historical length. Usually people use Chinese Industrial Survey (1998 2007) because of the homogeneity of the annual dataset: each year has almost identical variables and a unique identifier. The data after 2007 suffers from several issues. First, the 2008 year data has no identifier and 2009 miss one-third of the identifiers. This complication make 1The China Statistical Yearbook data can be accessed through the website of National Bureau of Statistics of China, while the China Industry Statistical Yearbook and the China Labor Statistical Yearbook can be accessed through the website of China Knowledge Resource Integrated Database (http://www.cnki.net/).