Measuring Gross Output, Value Added, Employment and Labor Productivity of the Chinese Economy at Industry Level, 1987-2008 – An Introduction to the CIP Database (Round 1.0)

Author Name Harry X. WU  (Hitotsubashi University)
Creation Date/NO. October 2012 12-E-066
Research Project East Asian Industrial Productivity Project
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This paper introduces the preliminary version of the China Industrial Productivity Database (CIP Round 1.0), a first of its kind covering the period 1987-2008, including data problems and the construction procedures to deal with the problems. It also discusses the outstanding methodological and data issues aiming to invite constructive comments and suggestions for further improvement of the database. Finally, using the CIP data, this paper provides a preliminary measure of China's labor productivity at industry level and individual industries' contributions to and labor reallocation effect on the aggregate labor productivity growth of the economy. Our preliminary findings show that there was nearly a fourfold growth (383%) in the labor productivity of the Chinese economy over the period 1987-2008, or an increase of 6.6% per annum. The top two performers were post-and-telecommunication service and transportation equipment manufacturing, experiencing an annual growth of labor productivity by 16.3% and 15.1%, respectively. However, that health care (11.0% p.a.) and government service (9.7% p.a.) also fell in the "super labor-productivity-growth club" raises a serious question about potential data problems because the labor productivity growth of these sectors is typically low or close to zero by international experiences. China gained from the labor reallocation effect alongside the state sector reform beginning in the early 1990s. But the effect turned into negative following the Asian financial crisis in 1997-98 and maintained that status in the aftermath deflationary macroeconomic environment (1998-2001). The labor reallocation effect became positive again after China's entry into the World Trade Organization (WTO) (2002-08).