After impressive growth in the 2000s, largely driven by the rapid growth of young privatefirms (Brandt, Van Biesebroeck and Zhang, 2012), China’s productivity growth has stagnatedin recent years. While this slowdown in aggregate total factor productivity (TFP)has also occurred in other countries, China’s productivity deceleration in the post-GFCperiod has been particularly dramatic, with TFP rising by around 22 percent between2003 and 2011 and a mere 5 percent between 2011 and 2019 (see Figure 1a). Given loomingdemographic headwinds and diminishing returns to state-led investment, China’smedium and long-term growth prospects are set to become increasingly dependent onits ability to reignite productivity growth. However, a lack of firm-level data in the post-GFC period has made it difficult to diagnose the causes of the productivity slowdown inrecent years.