The existence of human capital externality has important practical significance. It is an important decision-making basis for the government to invest in education and human capital. This paper identifies human capital externality from the perspective of industrial plant's productivity using the Chinese Industrial Enterprises database, Census of Population, and China Urban Statistical Yearbook. Considering the endogeneity of urban human capital, we used 2SLS estimation method to empirically study the impact of urban human capital on industrial plant's productivity. We find that the output of industrial plant is significantly and positively correlated with the ratio of urban population with college degree or above after controlling for a plant's own human capital. The positive externalities of urban human capital mainly exist in megacities with population more than 3 million. We also explore the human capital externality within manufacturing industry by dividing the human capital into two parts:intra-industry and other manufacturing industries, we find that the positive externality of intra-industry human capital will increase with the city size growing, while the positive externality from other manufacturing industries will decline with the city size growing. From the perspective of plant's heterogeneity, we find that the productivity gains of hi-tech plants, non-state-owned plants and large plants generated by human capital spillover within cities are greater. In addition, the city's FDI, government's fiscal expenditure and distance to ports have negative effects on industrial plant's productivity. The conclusion shows that it's particularly important for sustainable economic growth in the new era to increase human capital investment, upgrade human capital structure and release human capital spillover effect in big cities.