| The investment rate has been increasingly widespread concerned in the economic analysis and research. It is an important indicator to measure of the relationship between the building and life, and to assess the coordinated development of the national economy. Since the reform and opening-up, Chinese investment rate continues to maintain at a higher level of running, and is much higher than the world average level, which triggers a controversy on the range of reasonable rate of investment in China. With the rapid rate of investment and economic growth, the domestic discussion on China’s economic and investment rate is overheating.Although the high rate of investment has a stimulating role in the economy, the continued high rate of investment will give the economy a negative impact. Many economists worry that because of the excessively high rate of investment and relatively low consumption rate will lower the efficiency of investment, and ultimately affect the quality and efficiency of economic operation, which is difficult to maintain sustained, rapid and steady growth of the macroeconomic. And the rising investment rate and the declining investment efficiency imply a huge financial risk, such as the outbreak of the financial crisis in Southeast Asia in the1990s. So a lot of economists begin to doubt the mode of economic growth, as well as its sustainability. Many consider that China’s economic growth is the result of investment expansion, which is unsustainable. Therefore, identify determinants affecting investment is undoubtedly beneficial to the sustainable development of the economy.This article uses the neoclassical growth model, explores the main determinants that impact Chinese total investment and investment rate through empirical study. Specifically, the paper studies the factors such as the growth rate of income, the capital income share, the relative price of capital/investment and a variety of market distortions that impact on the investment rate. The result shows that capital income share, tax, government expenditure openness, the relative price of capital/investment and two kinds of capital stock are the reasons that cause Chinese high investment rate. In a certain period of time in the future, it is necessary to control the growth rate of the investment rate, and improve investment efficiency whilst taking effective measures to increase the rate of final consumption, thereby increasing the stability and sustainability of economic development to avoid big ups and downs of economy. The innovation of this research is that it applies the neoclassical growth theory and the equation established by Garcia-Belenguer and Santos (2009), combining with China’s actual data to take measured regression, use cointegration analysis rate to analyze the factors that determine the high investment rate, as well as their long-term relationships, which is helpful for us to understand the high rate of Chinese investment since China’s reform and opening up.Based on the empirical conclusions of this article, and combined with the characteristics and circumstances of the reality of China’s economic development, this paper proposes a number of policy recommendations:First, adjust the ratio of allocated elements share. Second, promote the reform of the investment system. Third, the choice of government expenditure should follow to adjust and optimize industrial structure, promote industrial upgrading and updating of principle and speed up the upgrading of industrial structure. Fourth, adjust tax policies. Apply taxes to make the economic growth to rely more on consumption rather than investment, adjusting investment-consumption structure. Fifth, reduce dependence on foreign trade, thus domestic enterprises should improve the efficiency of capital use, while improving the quality of export products. |
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