This paper analyzes the causal relations between ?rms? productivity, factor intensity and
export participation. Using propensity score matching techniques and ?rm-level panel data for
Chinese manufacturing ?rms over the 1998-2007 period, we ?nd strong evidence of domestic ?rms
self-selecting into export markets with higher productivity ex ante, and enhanced productivity
ex post. No such pattern is observed among foreign-invested ?rms. We also ?nd that both
domestic and foreign new exporters exploit China?s low labor costs and specialize in their core
competence, that is, ?rms become less capital-intensive after exporting, relative to the matched
non-exporting counterparts in the same industry. To rationalize these results that contrast
with most ?ndings in the existing literature, we develop a variant of the multi-product model
of Bernard, Redding, and Schott (2010) to consider varying capital intensity across products.
Using transaction-level export data, we ?nd evidence that Chinese exporters add new products
that are more labor-intensive than existing products and drop products that are less labor-
intensive, supporting the model predictions. Firms with a bigger decline in capital intensity
after exporting are found to have a larger increase in measured TFP