Estimation of China's provincial capital stock (1952–2004) with applications

Construction of physical capital stock data is a key element for estimating production functions, measuring total factor productivity growth, and for growth accounting. Existing literature, however, shows great variations in the estimates of China's national capital stocks because different methodologies and statistical sources were used. Systematic improvements and adjustments to China's GDP accounting practices have made it possible to produce a consistent and comparable series for provincial level capital stock using the perpetual inventory method (PIM). This article recommends a standardized procedure in constructing the level of capital stock for 30 Chinese provinces from 1952 to 2004. The merit of such statistical construction, although with some drawbacks, is that the series can be easily updated to more recent years using official statistics. Applying our capital stock data, we estimate total factor productivity growth and characterize the spatial pattern across provinces in post-reform China.