1 Introduction
Unlike developed countries, in the process of development, government-led investment has played a key role in promoting economy in China. As seen from Table. 1, since 1990s, in the composition of China's GDP, the capital formation rate raised from 34.9% in 1990 to a record high 43.2% in 2004, after that, this figure went down to around 42.5%. At the same time, the final consumption rate fell from 62.5% in 1990 to 48.8% in 2007. Investment has also made a great contribution to GDP growth throughout these years.