1. Industry Productivity Growth in China and Prospects for Growth
Jing Cao§, Mun S. Ho*
Xianchun Xu§ and Hang Yu**
*Harvard University, §Tsinghua University, and ** Beijing University
World KLEMS Conference 2018
Harvard University
June 4, 2018

2. Introduction Continued debate on the sources of the growth
Measurement of prices, import prices
Measurement of capital and land
Difficulties in FISIM, Housing imputation
Labor input and Institutional changes affecting future growth:
Relax restrictions on labor flows
Retirement reform

3. Previous Studies

4. Data issues
Time series based on IO benchmarks 1981,87,92,97,2002,07,12
note: has changes in classifications
No time series of gross output by industry;
interpolate using Value-added in Nat Ac. available
9 sectors.
. Little data on land and “mixed income”
PPI’s only for agriculture, manufacturing, mining, utilities
For services PPIs Wu (2015) used CPI’s, wages, etc

5. Our work here Use Harry Wu et al. (2015) (RIETI China Industrial
Productivity database) for nominal IO
Try different proxies for services PPI’s
Add estimates of Import prices (to be completed)

6. Comparison of price deflators
Industry
CIP's price index
NBS deflator
PPI in this research
Wholesales & retails (27)
Urban consumer price index (CPI)
By quantity of transactions
implicit deflator calculated from NBS nominal and real VA
Hotels and restaurants (28)
Part of CPI, weighted
Transport, storage, post (29)
Transport component of CPI, excluding price of equipment (vehicles)
By quantity trend estimation
Information services (30)
Telecommunication component of CPI
CPI of tele; wage index of computer and software
cpi and wage index (simple average)

7. Comparison of price deflators
CIP Classification
CIP's price index
NBS PPI
PPI in this research
Financial services (31)
Average of transport, communication, rental and utilities components of CPI
Component index
implicit deflator calculated from NBS nominal and real VA
Real estate services (32)
Implicit service charge per meter2 for 1993 onwards and assumed to move along with housing component of CPI
Business services (33)
As financial services (31)
CPI; wage index
Wage index, without CPI
Government (34)
Urban consumer price index (CPI)
wage index by sectors
Wage index

8. Comparison of price deflators
CIP Classification
CIP's price index
NBS PPI
PPI in this research
Education (35)
Based on education components of CPI before 2006; adjusted to CPI trend afterwards
CPI
wage index of education
Healthcare, social security (36)
Based on average spending of per hospital visit per outpatient (MoH, various issues)
Health: people received services; Social security: wage index
wage index of three industries

9. Comparing CIP deflators with our proxies for service industries

10. Price deflator comparison, cont.

11. Using the new price proxies, we estimated TFP using the CIP data for nominal output, real capital and labor input.
(this version assume import price = domestic price)

12. TFP comparisons

13. TFP comparisons Full( Services I) : Transportation, Telecom, Finance
Sate Monopolized(Services II): Trade, Hotel, Real estate, Tech & Bus svc, Other svc
Non-mkt (ServicesIII) : Public admin, Education, Health&Social
The Non-market Sectors have smaller TFP growth when we proxy output price with Wage index

14. China’s Growth Prospects – Labor dimension
Projection of labor input accounting for aging, retirement reform, urbanization and educational improvement

15. Historical labor input, Wu et al. (2015)
Growth rate :
Employment: 1.6%; Effective Labor 2.8%; Labor quality: 0.76%

16. Projection of population and hours due to retirement reform

17. Projected educational attainment

18. Labor input accounting for education, aging and retirement reform

19. Conclusions
Industry level accounts for China still faces many fundamental problems
Expansion of PPI coverage to growing Services is key
Future work:
- include import price estimates
- improve FISIM and Housing output measures