Ownership and Sector Performance in Current China -- A Regional Study

This paper uses the latest provincial data to study the productivity implications of ownership diversi¡¥cation in China's industry. It investigates the different performance of di?erent ownership sectors. It is found that there are significant differences in both production technology and the determinants of economic performance at provincial level between sectors of SOEs, collectives, domestic private enterprises, Hong Kong, Macau and Taiwan funded firms and foreign invested firms. While Cobb-Douglas production functions fit the production technologies of the state controlled, collective and overseas Chinese funded sector very well, the production technologies of the domestic private and foreign funded sector are better represented by Translog production function. The average total factor productivity across di?erent sectors is ranked from the foreign funded sector, domestic private sector, collective sector, Hong Kong, Macau and Taiwan funded sector, to the state controlled sector in descending order. In addition, the determinants of economic performance change substantially from one ownership sector to another.