The Performance of State-Owned Enterprise: New Evidence from the China Employer-Employee Survey

Drawing on a random sampling, longitudinal data of manufacturing firms and workers we collected ourselves, China Employer-Employee Survey (CEES), this paper provides a complete analyses about differences of productivity and financial returns between state owned enterprises (SOEs) and private firms in China. We find that, the labor productivity and TFP of SOEs are significantly higher than private firms between 2013 and 2015, which is different from existing papers using Annual Survey of Industrial Firms (ASIF) for earlier period, which only include SOEs and private firms with annual sales above 20 million RMB (USD 308,000). Furthermore, this paper finds that, although better human capital, more market power and better management can explain partially why productivity in SOEs are higher, there remains a large share of the SOE advantage in productivity that is still left unexplained. In stark contrast, we find that, financial returns measured in ROA and ROE are significantly lower for SOEs than private firms.