Studies On The Productivity And Trade Of Chinese Manufacturing Firms

The development of manufacturing firms is the primary driving force behind rapid economic growth in China. On the side of the domestic economy, these firms are the main suppliers of the industrial products, and an important guarantee of labour employment. On the side of the international economy, they play the key roles in competing with foreign companies and participating in the global labor divisions. Thus, the production efficiency, absorbative capability of advanced technology, and contribution to the value-added in trade, are all essential to the current and future substainabilities of the national economy. Of these firms, private ones are playing increasingly significant roles. Based on such background, this thesis will be composed of three closely related projects by explorting micro-level datasets both of comprehensiveness and represebntativeness.The first project uses the first national economic census data to systematically investigate the issue of productivity performance of China's private enterprises and their investment efficiency. Evidences indicate that the private enterprises in the material and machinery industries in the eastern area have a leading advantage of both labor and capital productivity over their counterparts in the other areas, much of which, however, is due to the outstanding performance of the large firms. An estimation of the production function leads to a robust estimates of capital elasticity between 0.2 and 0.3 in most sectors. Based on this, we decompose the variances of productivity and find that nearly 90% of the within-region and industry productivity variation stems from total factor productivity (TFP), while the contribution from capital per capita accounts for only 13%.Although the primary source of inter-industry productivity variation is still TFP, capital per capital plays an essential role in explaining the differences in productivity across regions. The marginal product of capital is found to be unequal across regions and industries, which implies that there exist some degrees of inefficiency in the allocation of private capital across sectors. Then we infer from an experimental simulation that the potential improvement is more significant if the capital is reallocated across provinces than if across industries, which implies that the inter-region barriers are more serious than inter-industry barriers for the mobility of private manufacturing capital.Also using a firm-level dataset from the first national economic census, the second project explores the impact of the productivity heterogeneity on the absorption of FDI spillovers. Foreign firms in China are usually thought to have the frontier technologies while domestic private firms are the rising, prospective force for the future development of the economy. With this in mind, the rearch questions underlying this project can be expressed as:do foreign investment activities promote or hinder the productivity improvement of domestic firms? And, if any, how do the mechanisms work?We find that foreign presence at the firm level has a positive and increasing effect on productivity. And a threshold effect of productivity of the private firms is found in absorbing horizontal and backward spillovers from FDI. Finally, spillovers from the downstream foreign-owned firms-increase most upstream private firms' productivity, while non-foreign-owned joint ventures in the downstream sector has a negative impact on those upstream with low productivity. These findings imply that the divergence in productive capacity is shaped within the private sector.The third project studies the roles of firms in China's export boom since 2000. Different from the previous two projects, we use new, detailed and comprehensive linked firm-product data for this project. The study is organised in three parts. First, we decompose the total growth in exports into an intensive and extensive margin at both the firm and the product level. We also use this decomposition to analyse the role of processing firms, foreign-owned firms and firms which benefit from export policies. Second, we evaluate the extent of value-added in China's exports, using a modification of a method proposed by Hummels et al. (2001) which takes into account the prevalence of processing firms. Third, we provide new estimates of the technological intensity of China's exports.Our decomposition analysis indicates that firm entry played a larger role in China's export boom than is the case in other countries, and that processing firms were an important component of this. Our estimates of value-added suggest that the foreign content of China's exports is much higher than previously estimated. Finally, our estimates of technological intensity show that Chinese exports had been increasingly intensive in technology, but the overall intensity is lower when the exports are evaluated by domestic value-added than by final value.