Technical efficiency and technology gap of the manufacturing industry in China: Does firm ownership matter?

For several decades, the manufacturing industry has been the pillar industry in terms of economic growth in China. The importance of the manufacturing industry is also highlighted by the numerous policy interventions in favour of this industry. In this paper, we identify the key industrial sectors in terms of technical performances and technological advancements for the period 1999-2007. This represents particular valuable information in the context of policy implementations. The distinguishing features of our study are five-fold. One, we make used of a tailored firm-level database. Two, we distinguish between four types of firm ownership. Three, we consider 30 manufacturing sectors. Four, we extend a well-established methodology to answer our questions. Five, we rely on a robust nonparametric estimation method. Our results confirm that firm ownership is important in explaining technical efficiency and technology gap. We also show that foreign firms set the standard for technical efficiency, and are the leaders in terms of technology advancement; that private firms show technology advancements accompanied by eciency losses; and that China has successfully revitalized state-owned firms, although there is still room for improvement. Finally, we find evidence that China's industrial development plans have been successful in stimulating technology progress in many key sectors; but that the current policy of (re)nationalization may undermine technical efficiency and slow down technology progress.