Labour and total factor productivity in the Chinese Electronics Industry in the 1990s

The Chinese Electronics Industry (CEI) is the largest industry in China in terms of sales revenues and accounts for the largest amount of foreign direct investment of any industry in China. This paper provides an analysis of the industry's economic performance using panel data for the period 1993 to 1999 to calculate labour productivity, and for 1995 to 1999 to calculate total factor productivity. The analysis provides separate figures for each main ownership form in China. The results confirm that while performance under all ownership forms has improved during the 1990s, productivity in state-owned enterprises has continued to lag behind that in collectives and joint ventures, including wholly foreign-owned firms. In addition, the study finds that the move to corporatise state-owned enterprises by creating limited liability companies, with a view to improving corporate governance and therefore their management, has yet to have a noticeable effect on productivity. Limited liability companies in the CEI have a higher absolute level of productivity than traditionally-organised SOEs, but the growth rates of the two sectors did not differ much over the period studied. Also, SOEs, in traditional and limited liability forms, continue to be outperformed by the collective and joint venture sectors.