Productivity Convergence Among Chinese Firms: The Role of Five-Year Plans and SOEs

This study examines productivity convergence among Chinese manufacturing firms over the period 2000–2020. The research found evidence of club convergence, where firms converge toward different productivity levels rather than a single steady state within specific sectors. The number of convergence clubs varied by industry and over time, indicating heterogeneity in productivity development across firms. The speed of productivity convergence among firms within an industry generally decreased over the four Five-Year Plans, suggesting that over time it became more difficult for less productive firms to catch up. The presence of state-owned enterprises (SOEs) in an industry was found to be positively associated with faster productivity convergence, indicating SOEs may help in knowledge dissemination and facilitate catch-up of lagging firms. Strengthening intellectual property protection over time was also linked to slower productivity convergence, as it increased the costs of knowledge spillovers. The results highlight how the industrial presence of SOEs and the trend of strengthening intellectual property protection could impact productivity convergence among manufacturing firms.