Will China's Economic Growth Slowdown with the Declining Level of Public Investments?

This paper measures the impact of public and private investments in fix assets on economic growth in different regions of China. A panel regression model of production function incorporated with human capital is used to estimate the impact of the public investments on economic growth. Our empirical results show that the growth of public investment had a positive and significant impact on economic growth in China. Public investment played an important role in the economic growth in China. In the short run, the decrease of public investment is likely to lead to China's economic slowdown. Our results suggest the possibility to maintain stable economic growth by addressing the overcapacity caused by excess public investment and improving the efficiency of investment.