1. Investment climate in 120 Chinese cities: preliminary results from a survey by NBS and World Bank David Dollar, World Bank, May 2006

2. Six regions involved in investment climate survey

3. Survey design Covers all provincial capitals plus largest other cities in the province 100 firms from each of 116 cities, 200 firms from mega-cities (Beijing, Tianjin, Shanghai, Chongqing) Survey universe: for each city, top 10 manufacturing industries in terms of sales Divide firms with 10+ workers into top, middle, and bottom third in terms of sales; randomly choose from each group, 33, 33, and 34 firms, respectively

4. Distribution of sample firms by ownership Majority state owned 8% Foreign invested 28% Domestic non-state 64%

5. Distribution of sample firms’ assets by ownership Majority state owned 32% Foreign invested 27% Domestic non-state 41%

6. Rate of return on capital 7% 19% 22% State-owned enterprises Private domestic enterprises Foreign enterprises

7. State enterprise share of industry output 01020304050607080 Percent Southeast Bohai cluster Northeast Southwest Center Northwest

8. Private rate of return by region 0510152025303540 Percent Southeast Bohai cluster Northeast Southwest Center Northwest

9. Customs clearance (exports) 02.557.510 Days Southeast Bohai cluster Northeast Southwest Center Northwest

10. Output lost to power outages 0123456 Percent Southeast Bohai cluster Northeast Southwest Center Northwest

11. Days dealing with government bureaucracy 01020304050607080 Days Southeast Bohai cluster Northeast Southwest Center Northwest

12. Surplus labor 012345 Percent Southeast Bohai cluster Northeast Southwest Center Northwest

13. Firms making informal payments to secure bank loan Southeast Bohai cluster Northeast Southwest Center Northwest 0246810 Percent

14. Lagging regions: productivity gains from achieving Southeast investment climate 06080100 Northeast Southwest Center Northwest Percent

15. Policy: city level Divest state enterprises Simplify business registration, procedures, red tape Improve logistics (customs, transport services )