Abstract With the continuous development of the economic globalization and the gradual deepening of the international industrial division, China is more and more involved in the global production and operation system. After performing the reform and opening up policy, China has greatly developed its economy and become the world's largest manufacturing country. Although China has made huge achievements, its production efficiency and the added value of its products are very low. China's manufacturing enterprises are in urgent need of improving TFP and upgrading. Many studies show that producer service plays a role as a ″propeller″ and ″adhesive″ in the development of the manufacturing industry. This paper discusses the mechanism of the opening up of producer services to the total factor productivity of manufacturing industries. The opening up of producer services can provide quality intermediate inputs for local manufacturing industries; the outsourcing of producer services can enable companies to abandon their disadvantaged sectors, focus on their core business, transfer capital risks, and reduce the production costs of manufacturing enterprises. The opening up of producer services can attract large amounts of foreign high-quality intellectual capital and human capital into domestic enterprises, bringing in spillover effects. All of the above can enhance TFP of manufacturing enterprises. This paper uses the data of Chinese Industrial Enterprise Database from 2001 to 2013 to establish a model which empirically analyzes the impact of the openness of different types of producer services on the total factor productivity of manufacturing enterprises. 〖JP2〗The dependent variable is TFP calculated by using the LP method; independent variables include the openness of China's transportation services, insurance services, financial services, post and telecommunications 〖JP〗services, computer and information services, patent royalties service, consulting services, and other business services; the controlled variable includes enterprise ownership, capital-output ratios, average annual salary of employees, enterprise age and its squares. The result shows that the opening up of transportation services, financial services, patent royalties service and other business services can promote the productivity of the whole manufacturing industries. The opening up of insurance services, post and telecommunications services, computer and information services and consulting services have a negative effect on the productivity of whole manufacturing industries. The capital-output ratio of enterprises and the average annual salary of employees also have a significant positive effect on the total factor productivity of enterprises; the state-owned ownership has a significant negative effect on the total factor productivity of enterprises; the enterprise age and its squares have no significant effect on the total factor productivity of enterprises. In addition to the benchmark regression analysis, this paper uses the TFP calculated by the OP method (capital depreciation rates are 15% and 10% respectively) as the proxy of the dependent variable (TFP calculated by the LP method) in order to make the measurement results more robust. The result of the robustness test is consistent with the result of the benchmark regression. This paper divides the manufacturing enterprises in China into three categories: 〖JP2〗labor-intensive enterprises, capital-intensive enterprises, and technology-intensive enterprises. The result shows that transportation services have the greatest positive impact on technology-intensive 〖JP〗firms; financial services have the greatest positive impact on labor-intensive firms; patent royalties services have the greatest positive impact on capital-intensive firms. Also, insurance services and consulting services have the greatest negative impact on labor-intensive firms respectively; post and telecommunications services, computer and information services have the greatest negative impact on capital-intensive firms respectively. Finally, this paper puts forward some proper policy recommendations. For example, the government should open up different producer services according to different types of manufacturing industries; raise the barrier of the service industries which have a negative impact on enterprises; raise the capital-output ratio of enterprises and the average annual salary of employees; continue to promote the reform of state-owned enterprises, and break down the industry monopolies. Thus the total factor productivity of manufacturing industries in China can be further promoted.
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