Using Chinese manufacturing firm data for the 1998‒2007 period, we study the role of capital intensity in facilitating exporting. It has been documented that Chinese exporters are less capital-intensive than non-exporters. However, when comparing exporters with non-exporters within ownership, we show domestic private exporters are ex ante less capital-intensive than their non-exporting counterparts while state-owned exporters are ex ante more capital-intensive than their non-exporting counterparts. This pattern is inconsistent with previous evidence from both developed and developing countries. We build a simple model with factor market distortion and heterogeneity in factor shares of the production function to explain this patten. Our findings suggest, when factor markets are hig...[ Read more ]

Using Chinese manufacturing firm data for the 1998‒2007 period, we study the role of capital intensity in facilitating exporting. It has been documented that Chinese exporters are less capital-intensive than non-exporters. However, when comparing exporters with non-exporters within ownership, we show domestic private exporters are ex ante less capital-intensive than their non-exporting counterparts while state-owned exporters are ex ante more capital-intensive than their non-exporting counterparts. This pattern is inconsistent with previous evidence from both developed and developing countries. We build a simple model with factor market distortion and heterogeneity in factor shares of the production function to explain this patten. Our findings suggest, when factor markets are highly distorted, choosing a proper factor share can facilitate exporting.