The production-based capital asset pricing model ( PCAPM) derives asset prices in a general equi-librium conditional on profit maximization for corporate investors． Compared to the consumption-based capital asset pricing model，PCAPM can better satisfy the assumptions such as perfect information and rational inves-tors． This paper considers asset pricing in a PCAPM framework，and decomposes the production beta into a cash flow beta and a discount rate beta based on the present-value model． The empirical analysis is performed using data on aggregate investment and stock prices． The findings confirm that the cash flow beta from PCAPM is a significant pricing factor and can explain the cross-section variations in risk premium for different stocks in the Chinese stock market，while CCAPM fails to explain such variations．