By Tang Changhua  No.03170151

[Abstract] In this paper, we look for new opportunities for Chinese economic growth in year 2006 that is the expansion of total investment in fixed assets, which will promote the growth of GDP. This paper establishes an econometric model to analyze the relationship between GDP and total investment in fixed assets. And through econometric methods, I make a conclusion that the two variables are close-relational. Finally, I use the model which I will establish and modify to prediction that China should expanse its total investment in fixed assets in the year 2006, which would be of great benefits to its economic growth.

[Key words] GDP; total investment in fixed assets; total exports; econometric model

Part One: Introduction

China has a rapid speed of economic department these years. As is known to us, investment, consumption and export are the three carriages to impulse economic growth. From the observation of economic growth in the former years, we found that China has invested much in fixed assets and has a favorable balance of total imports & exports, while the consumption was dissatisfied compared the others. Also, we found total investment in fixed assets played an important role on the growth of GDP, while the export and consumption are more complicated and uncertain. Accordingly we established the following model to make a positive analysis between total investment in fixed assets and gross domestic product (GDP).

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