The effect of state capital injection on private firms’ performance: Evidence from Chinese industrial firms

Based on Chinese industrial firms’ data, this study found that state capital injection weakened the technological progress and management efficiency of private firms, which led to a reduction in enterprises’ total factor productivity. State capital injection also increased the labor cost and investment in fixed assets, and lowered the profitability of firms. Furthermore, the state capital did not have a significant negative impact on firms in technology-intensive and monopoly industries. This study has shed some lights on the reform of the state-owned assets management system and the development of a mixed ownership economy.