Research On China’s Industrial Capital Return Rate And Influencing Factors:2008-2016

With China’s entering into the new normal stage of economic development,the growth rate of total profits of industrial enterprises has fallen sharply,which has caused people to worry about the rapid growth efficiency and sustainable growth of the current market economy.In terms of growth,analyzing the current determinants of return on capital from a theoretical and empirical perspective is of great significance.Most of the existing literature focus on the theoretical framework of industrial organization and only consider the determinants of return on capital from the technical level,ignoring the labor cost and capacity utilization rate.The rate of return on capital is very important for economic growth,and it is also a key indicator for studying investment efficiency and economic operation efficiency.It is worthy of careful research and analysis.This paper measures the changes in the rate of return on capital in China and the three regions of East,Central,and West from 2008 to 2016,and analyzes and discusses the main factors that cause the rate of return on capital markets in various regions through empirical analysis.The changes in China’s return on capital from 2008 to 2016 can be divided into two phases.One is the rising phase of the return on capital during 2008-2010.The main source of changes in the return on capital during this phase is the increase in profit share;The other is the overall decline in the rate of return on capital during the period 2010-2016.Although the potential output-to-capital ratio has a positive contribution to the rate of return on capital,but the return on capital began to decline because of the larger decline in profit share.This article is based on Marx’s return on capital analysis framework,using panel data of China’s industrial sector’s return on capital from 2008 to 2016,and using panel analysis methods to empirically analyze its influencing factors.The study found that there is a significant positive correlation between technological progress and return on capital,indicating that technical efficiency is of great significance in explaining the changing trend ofprofitability.The study of the main influencing factors of changes in the return on capital of China’s industrial sector in different periods found that the increase in return on capital during 2008-2010 was due to an increase in profit share,while the capacity utilization rate and the potential output-to-capital ratio showed a downward trend.The main reason for the continuous decline in the return on capital during2010-2016 was the end of the bonus period of the macro stimulus policy,and the profit share fell significantly,although this stage represents increased potential output capital ratio of technological progress and the capacity utilization rate of resource allocation efficiency,but affected by the larger decline in profit share,the return on capital was in a state of decline.Therefore,we believe that the capital deepening theory,the theory of excessive competition and technological progress ignore the factors of labor distribution and capacity utilization,which can not fully explain the changes in the rate of return on capital.It is necessary to include labor compensation costs and capacity utilization The scope of analysis will be more complete for the study of return on capital.On the other hand,there are relatively obvious differences in the return on industrial capital among the regions in China.This article uses panel data from 29 provinces and cities in China from 2008 to 2016 to conduct an empirical analysis of factors affecting the return on industrial capital.The research conclusions show that there is a negative correlation between the increase in labor compensation and the return on capital.Also,technological progress has a significant positive effect on the return on capital.And there is a significant positive impact of government intervention on the east,while it has a significant negative relationship on the west and the middle.in the first stage,there is no significant relationship between technological progress and capital return rate.The increase of capital return rate is mainly driven by GDP.In the second stage,the decline of capital return rate was caused by the decline of economic prosperity,the rise of labor remuneration,governmentintervention and the decline of total import and export volume.