No.779 Market power of China's State-owned Firms: Evidence from Manufacturing Firm-level Data
There has been a great discussion about a phenomenon: Guojin Mintui (i.e., the state advances, the private sector retreats) since the latter half of the 2000s. Has the state-owned sector been expanding and undermining private enterprises? To address this issue, this paper estimates changes in markups of China's state-owned firms from 2003 to 2007, using manufacturing firm-level data. It is found that the relative markup of the state sector is smaller than those of the private and foreign sectors, while it tends to steadily increase and be catching up with the private and foreign sector during 2004--2007; However, the catching up process is not observed in surviving firms. This implies that the exit of the state-owned firms with lower markups causes the increase in the average markups of the state sector. In terms of the relative markups in the manufacturing sector for 2003 to 2007, this study does not support the argument of Guojin Mintui.
Keywords: Markups, China's state-owned firms, Manufacturing firm-level data
JEL classification: D22, D24, L11, P21
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