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China’s economy has experienced a high-rate growth since the reform and opening up in 1978. However, some macro-statistics indicated that China’s economy grows with a low efficiency. In fact, these conclusions based on macro-statistics and the performance of the economy as a whole cannot reflect the multi-level, dynamic and, therefore, complicated situation of China. By using firm-level data, and the stochastic frontier production model, this paper makes an investigation on the changing trends of TFP of China’s LMIE between 1995 and 2002, and the decomposition of factors of growth.

Productivity growth in China’s large industrial firms: patterns, causes, and implications