investment climate in 120 chinese cities: preliminary results from a survey by nbs and world bank...
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Investment climate in 120 Chinese cities:
preliminary results from a survey by NBS and World Bank
David Dollar, World Bank, May 2006
Six regions involved in investment climate survey
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
Distribution of sample firmsby ownership
Majority state owned8%
Foreign invested28%
Domestic non-state64%
Distribution of sample firms’ assets by ownership
Majority state owned32%
Foreign invested27%
Domestic non-state41%
Rate of return on capital
7%
19%
22%
State-owned enterprises
Private domesticenterprises
Foreignenterprises
State enterprise share of industry output
0 10 20 30 40 50 60 70 80Percent
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
Private rate of return by region
0 5 10 15 20 25 30 35 40Percent
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
Customs clearance (exports)
0 2.5 5 7.5 10
Days
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
Output lost to power outages
0 1 2 3 4 5 6
Percent
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
Days dealing with government bureaucracy
0 10 20 30 40 50 60 70 80
Days
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
Surplus labor
0 1 2 3 4 5
Percent
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
Firms making informal payments to secure bank loan
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0 2 4 6 8 10
Percent
Lagging regions: productivity gains from achieving Southeast investment climate
0 60 80 100
Northeast
Southwest
Center
Northwest
Percent
Policy: city level
• Divest state enterprises
• Simplify business registration, procedures, red tape
• Improve logistics (customs, transport services)