Research On Motivations Of China’s Regional Investment

The eastern area of China has undergoing the transfer of the world industry since the 1990s. The economy of this area is growing fast and has attained remarkable achievements because of the huge investment in the past 30 years. The eastern area of China drove the attention of the global investors mainly because of the geographical advantage. However, with the development of the industry and the economy, the product elements cost has increased a lot and the development environment was getting worse and worse. Thus, the Midwest area of China is getting more and more capital. It is very beneficial for the national economic restricting. The economy of this area will be largely promoted because of the advanced technology. Meanwhile, the eastern areas could also take this opportunity to optimize the industry structure and promote the industrial restructuring and upgrading. The eastern areas could concentrate on the development of new industries so that maintaining a sustainable competitive edge. Therefore, the study of overall investment and investment preference of the domestic capital is a very meaningful subject.This paper chooses the macroeconomic data of the provinces and autonomous regions of China from 2003 to 2012, and study the investment motivation of the fixed asset from the horizontal and vertical view. Almost 21 first-class industries are included in this study. This article also considering some influential factors including productivity, infrastructure, market capacity, level of urbanization, technological level, total investment amount, government use of funds and market level. The investment motive model was constructed on the basis of investment theory.In the part of empirical analysis, Granger causality theory is used to discuss all the parameters. Then the varying parameter model with panel data is used to conduct a regression analysis. As a result, the investment amount and the ROI displays a "U" shape relationship. The infection time is correlated with the ROI of different areas. The combined effect is obvious in different area of China. In the developed provinces of China, the investment volume is negatively correlated with the level of capital accumulation, while in the developing provinces of China, such as Guizhou province, the investment is positively correlated with the level of capital accumulation. In addition, technology, markets and urbanization have no significant impact on investment.