Impact Of Private Investment In The Regional Economy In China

So far, investment has been seen as one of the driving forces of the economic growth. Regions in China have also been relying on investment to achieve rapid economic growth. The definition of private investment in this article is the remaining portion of the whole society after removing the state-owned economic investment and the collective economic investment, which has made significant progress since the reform and opening up of China, and can reflect the contribution of individual and corporate investors to the economy and the development of Chinese market. The current "new normal" proposed government to further decentralization and invigorate the market, but private investment is still limited in many aspects, such as investment channels, investment risk, investment environment, investment horizon and so on. Therefore, in response to the "new normal", how to guide private investment to optimize economic structure and to improve the overall level of regional economic development has become an important topic of the current economics research area.This paper studies the impact of private investment in regional economic development and it will be divided into two parts, theoretical research and empirical research. First, the theoretical part will describe the concept of private investment and its own property, and will also explain the concept and indicators of economic development adopted in this paper. Then we will introduce some theories on economic development and our national conditions. On this basis, we will analyze the relationships between private investment and economic development of the eastern, central and western regions of China respectively. Firstly, we use factor analysis to evaluate the level of economic development of each province above; the results can show the differences in regional economic development. Secondly, we use correlation analysis to reveal the relationships of domestic private investment and overseas private investment with the economic development of those three provinces, the results of which can show the influence the two private investments make on the regional economic development. Finally, according to the results mentioned above, we will give advice for different regions on effective use of private investment in the construction of regional economic.Through a series of theoretical and empirical research, this paper draws the following conclusions:Firstly, generally speaking, as the deepening development of market economy, private investment in our country accounts for more proportion than other investments in total fixed asset investment, and it has become a major force in the whole social investment. Secondly, the distribution of private investment is very uneven with the eastern region occupies most of it, which corresponds to the fact that the level of economic development of the eastern region is higher than the central and the western regions. Thirdly, as the large-scale development strategy of central China and western China, the private investment growth rates of these two areas are slightly higher than that of the east. And central and western regions’measure to improve the investment environment will attract more private investment, thereby promoting their levels of economic development. Last but not least, the impacts of different types of private investment in regional economy are different. Among them, the impacts of domestic private investment in the country are positive, but the pulling effect of economic development on central and western are bigger than that on the east. The foreign private investment has a significant positive impact on the economic development of the eastern region, but its impact on the central and western region is rather small and sometimes it even appears to have reverse correlations. This mainly due to the obvious agglomeration of private investment, for the central and the western regions attract little foreign private investment and therefore get little benefit.