Using a firm-level data set for 1998 and 2005 including all of China’s “above designated size” enterprises, this paper investigates three issues. One key issue in China’s industrial system is the extent to which growth has been driven by productivity change. A second issue is the relative productivity performance of enterprises of different ownership types, including a comparison of state-owned versus various forms of non-state ownership. The third issue is whether productivity across China’s key regions – coast, northeast, central, and west – exhibits convergence or divergence. One key finding that cuts across all three issues is the exceptional contribution to productivity growth made by exiting and entering firms, much of which is associated with restructuring. The phenomenon of firm exit and entry contributes substantially to China’s overall industrial productivity growth, to the relatively rapid growth of state industry productivity, and to substantial productivity catch-up with the coastal region by many of the interior provinces.
Available at: http://works.bepress.com/yfzhang/3/