Study on the investment approaches of rural regional economic development in China

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Study on the investment approaches of rural regional economic development in China

Дослідження інвестиційних підходів регіонального економічного розвитку сільських територій Китаю

Inna Sokhan

In the modern conditions of globalization and economic development, the management of investments in agricultural production has become an important issue in the development of China's national economy. Understanding the relevant concepts of agricultural investment, analyzing its environment, building a scientific and sound structure, determining the proper scale and implementing an effective agrarian economic investment strategy scheme are very important to promote the modernization of agricultural production processes, increase the productivity of agriculture as a sector of social production in which people use the natural conditions of the environment, rely on the physiological functions of animals, plants and microorganisms, and strengthen and control the life of organisms through labor to obtain the material products needed society and farmers' incomes. Research and improvement of the theory of management of agricultural investments can help in making management decisions, increase the efficiency of commodity producers and strengthen the stability of rural areas. This article examines in detail the theoretical foundations and practical application of agricultural investment management, with the aim of providing useful recommendations and reference materials for decision-makers in the agricultural sector by defining basic concepts, analyzing the foundations of theory and research methods. Thus, relevant concepts and main problems of agricultural investment management and theories of economic growth of rural areas by investing in the agricultural sphere were presented. Various views of the classical theory of economic growth and development of rural areas were collected; the main obstacles to the development of agricultural investment are identified, including state macro-control at various stages of regional development.

Key words: agriculture, investment, agrarian sphere, regional development, rural areas, sustainable development, China.

У сучасних умовах глобалізації та економічного розвитку управління інвестиціями в сільськогосподарське виробництво стало важливим питанням розвитку національної економіки Китаю. Розуміння відповідних концепцій сільськогосподарського інвестування, аналіз його середовища, побудова наукової та обгрунтованої структури, визначення належного масштабу та впровадження схеми ефективної аграрної економічної інвестиційної стратегії є дуже важливими для сприяння модернізації виробничих аграрних процесів, підвищення продуктивності сільського господарства як сектора суспільного виробництва, в якому люди використовують природні умови навколишнього середовища, покладаються на фізіологічні функції тварин, рослин і мікроорганізмів, а також зміцнюють і контролюють життєдіяльність організмів за допомогою праці для отримання матеріальних продуктів, необхідних суспільству та доходів фермерів. Дослідження та удосконалення теорії управління сільськогосподарськими інвестиціями можуть допомогти в прийнятті управлінських рішень, підвищити ефективність діяльності товаровиробників та посилити стійкість сільських територій. Ця стаття детально досліджує теоретичні основи та практичне застосування управління сільськогосподарськими інвестиціями, маючи на меті надати корисні рекомендації та довідкові матеріали для осіб, які приймають рішення щодо інвестицій в аграрну сферу шляхом визначення основних понять, аналізу основ теорії і методів дослідження. Так, було представлено відповідні концепції та основні проблеми управління сільськогосподарськими інвестиціями та теорії економічного зростання сільських територій шляхом інвестування в аграрну сферу. Було зібрано різні погляди класичної теорії економічного зростання та розвитку сільських територій; визначені основні перешкоди розвитку сільськогосподарського інвестування, включаючи державний макроконтроль на різних етапах регіонального розвитку.

Ключові слова: сільське господарство, інвестування, аграрна сфера, регіональний розвиток, сільські території, сталий розвиток, Китай.

Formulation of the problem

agricultural investment management

With the accelerating pace of economic globalization, the international division of labor and capital flow have been intensified, and the global economic development has taken on the characteristics of imbalance under the continuous evolution of the world political and economic pattern. In the modern conditions of globalization and economic development, the management of investments in agricultural production has become an important issue in the development of China's national economy. Understanding the relevant concepts of agricultural investment, analyzing its environment, building a scientific and sound structure, determining the proper scale and implementing an effective agrarian economic investment strategy scheme are very important to promote the modernization of agricultural production processes, increase the productivity of agriculture and sustainable development of rural areas.

Literature review. The research is based on the previous literature review research (Sharpe, 2010; Liu Chengfang, 2012; Li Wei, 2012; Wei Houkai, 2008) and the current situation (Huang Ruyi, 2022; Lu Yujia, 2020; Wang Yaxin, 2022), relationship and development trend of investment management in domestic and foreign agricultural economy, the idea and logic of this research are laid, to provide guidance for the writing of this research, and to lay the theoretical review of this research.

The aim of the study. The purpose of the study was to investigate the conceptual foundations and practical application of the theoretical approaches of agricultural investment management, with the aim of providing useful recommendations and reference materials for people who make decisions about investments in the agrarian sphere by defining the main concepts and problems of agricultural investment management and the theory of economic growth of rural areas by investing in the agrarian sphere.

Presenting main material

"Investment" is an economic business that often occurs in various economic entities in the modern market economy environment, and it is also one of the words that people use very frequently in economic life. In the life of market economy, investment is a universal economic phenomenon. William Sharpe (2010), an American investment scientist, briefly defined the concept of investment in his book Investment Science as: investment is the sacrifice of certain present value in order to obtain possible and uncertain future value.

It can be understand it from several aspects. First, investment is an economic activity that now spends a certain value, and it has time. Second, the investment concept is different from the investment concept used in daily life. Third, investment is the formation and dynamics of capital, the greater the total amount of social investment, the greater the total amount of capital in the whole society. Fourth, the purpose of investment is to obtain various forms of remuneration in the future (Liu Chengfang, 2012). Therefore, the concept of investment can be defined as: investment is the economic behavior of capital investment and operation process of various economic subjects (countries, collectives, enterprises, institutions and individuals, etc.) for the purpose of expected benefits (economic benefits, social benefits, ecological benefits, etc.).

Agriculture is the oldest and most basic material production sector in human society. Agricultural production is an economic activity in which human beings consciously use the growth function of animals and plants to obtain food and other material materials necessary for life. That's why agriculture is usually defined as a social production sector in which people make use of natural environmental conditions, rely on the physiological functions of animals, plants and microorganisms, and strengthen and control the life activities of organisms through labor to obtain material products needed by society.

Agricultural investment refers to the investment of various economic subjects (countries, collectives, enterprises, institutions and individuals, etc.) directly used to develop agriculture and agricultural fixed assets for agricultural production in the process of agricultural expansion and reproduction, which is the workload of agricultural capital construction expressed in the form of money. Agriculture is the foundation of the development of rural territories, but agricultural investment economic management research is a very complex problem - between them accelerating agricultural development and strengthening the management of agricultural investment have the strategic height of protecting the overall national economy and the basic position of agriculture.

Agricultural investment has some characteristics different from investment in other sectors of the national economy, which is manifested in:

1. Comprehensiveness. Because agricultural production is dealing with nature, the whole agriculture has material circulation and energy conversion, the factors are quite complex. Agricultural investment must adapt to this characteristic, not only focus on a certain aspect, a little, less than the rest.

2. Variability. Because the object of production is living plants and animals. Production is greatly affected by natural factors. Therefore, agricultural investment must also be according to time, place, situation, investment plan and not fixed fixed model.

3. Long residual action. Land is the basic condition of agricultural production, and the development of land and natural resources has a long-term effect. Therefore, agricultural investment has long-term economic benefits, and the investment payback period is generally longer.

4. Moderation. There are many factors affecting agricultural production, under the condition that the level of science and technology has not yet reached the comprehensive control. Practice is often associated by diminishing pay. Therefore, agricultural investment must choose a moderate amount of investment according to the principle of optimization.

5. Polyphyly. China is still in the primary stage of socialism, and various forms of ownership coexist in the relations of production, making agricultural investment have various forms of fund raising from various sources.

The environment is relative to a certain central thing. The surrounding thing related with a central thing is called the environment of this central thing. The central thing is different, and so is the concept of the environment. For example, for human beings, the environment refers to the sum total of the space around the population and the various natural or artificially modified natural factors that directly and directly affect human survival and development (Lu Yujia, 2020).

We introduce the concept of environment into agricultural investment activities. The so-called agricultural investment environment refers to the sum total of the various surrounding conditions and conditions accompanying the whole process of agricultural investment activities. To sum up, the agricultural investment environment includes the natural, social, economic, political and legal elements that affect the agricultural investment activities. For enterprises, the investment environment is a factor that cannot be completely controlled. Enterprises must strive to recognize the environment, and strive to adapt to the environment, use the favorable conditions provided by the environment, and avoid adverse factors (Wei Houkai, 2008).

A good investment environment is an important factor in attracting and retaining investment. The key are formulating reasonable investment policies, improving local government services and paying attention to sustainable development. The development of agricultural investment environment has the following characteristics:

Within a specific space-time range: agricultural investment is limited by time and space, so the research needs to investigate the interaction law of the investment subject and the object in a specific region. The investment environment involves political, economic, natural and social factors, which comprehensively considers and optimizes the coordination of various parts.

Mutual influence and effect: the investment environment is an organic whole, and each part is interrelated and coordinated with each other, and any change may cause the change of other factors. Optimizing the investment environment will affect the evaluation of investors, so the reasonable space-time structure design should be conducted from the perspective of the whole.

Regional particularity: the regional investment environment has both general attributes and independent particularity. When formulating regional investment policies, we should comprehensively consider economic, social, cultural, environmental and other factors, formulate policies in line with local realities, and improve the management level and service capacity of local governments.

Sustainable development: focus on the sustainability of the investment environment, and pursue long-term and stable development rather than short-term economic growth. Environmental protection, social responsibility and sustainable development should be considered, and enterprises should be encouraged to fulfill their social responsibilities and achieve the common development goals of enterprises and society (Li Wei, 2012).

Agricultural investment environment is dynamic, multi-level and multi-factor, which can be divided from different angles. The following is the main division of the current agricultural investment environment:

Hard environment and soft environment: According to the material form attribute of agricultural investment environment elements, the investment environment is divided into hard environment and soft environment. Hard environment includes physical elements such as infrastructure, energy and transportation, and plays a fundamental role in supporting the agricultural investment environment. Soft environment mainly refers to non-material factors, such as administrative efficiency, policies and regulations, technical level, etc., which occupy a dominant position in the agricultural investment environment. The hard environment and the soft environment are interrelated and mutually restricted (Lu Yujia, 2020).

Investment environment of investors and the investment environment of the investor: According to the different investment subjects, the investment environment is divided into the investor investment environment and the investment environment of the investor. Different interest requirements lead to different evaluations of the investment environment. Investors pay more attention to the investment cost and the maximization of their own interests, while the investors need to comprehensively consider the relevance of regions and industries (Huang Ruyi, 2022).

Macro investment environment, meso investment environment and micro investment environment: According to different research levels, the investment environment can be divided into three types: macro, meso and micro. The macro investment environment focuses on the role of macro-social and economic variables and historical and cultural reality on social capital movement; the medium investment environment focuses on the status and role of specific industries or industries in specific regions; and the micro investment environment focuses on the geographical location, labor quality and market demand for specific investment projects (Wang Yaxin, 2022).

In addition, there are other angles of classification, such as investment environment can be classified from other angles, such as investment stage (investment environment, use environment and tax environment), investment country (domestic investment environment and international investment environment), constituent elements (political environment, infrastructure environment, financial environment, etc.) and factors such as natural geographical environment.

In short, the classification of agricultural investment environment helps to analyze and evaluate the impact of different factors on investment activities, providing investors with accurate and useful information to reduce investment risks and choose suitable investment areas and projects.

The optimization of agricultural investment environment is to attract foreign capital, technology, talent, management and other elements, integrate them into the local economy, realize the rational allocation of resources, optimize the combination and economies of scale, and improve economic benefits. The quality of agricultural investment environment directly affects the safety and income of agricultural investment activities, and becomes the key to regional and national economic competition (Wang Yaxin, 2022). The optimization of agricultural investment environment is a complex system engineering, involving a wide range of long-term, arduous and regional characteristics. When optimizing the agricultural investment environment, the following principles should be followed:

Principle of synergy: the investment environment elements echo, cooperate and complement each other, so as to optimize the overall function of the investment environment.

Targeted optimization principle: according to the conditions and development strategies of the region and the country, to formulate targeted optimization plans to meet the requirements of different investment activities.

Adhere to the principle of practice: optimize with reference to international practices and rules, reduce the adverse impact of the difference between foreign investors and host countries, and improve the effect of attracting foreign investment.

Principle of equality and mutual benefit: comprehensively considering the interests of investors and recipients, protecting the domestic economic interests and the legitimate rights and interests of foreign investors, and safeguarding the level playing field and national interests.

These principles can guide the optimization of the agricultural investment environment and ensure the optimization of the quality and effect of the investment environment. Based on the theory of circular cumulative causality, we pointed out that due to the existence of agglomeration, the developed regions will continuously and accumulatively achieve accelerated growth through the role of the market, and simultaneously produce industrial diffusion effect and capital return effect. "Diffusion effect" refers to the investment activities from developed regions to underdeveloped regions, such as industrial transfer; "return effect" refers to the process of capital return from underdeveloped regions to developed regions, such as cross-border capital flow (Huang Ruyi, 2022).

The imbalance of diffusion effect and return effect will lead to the imbalance of regional development. In the short term, it is the loss of resource capital in underdeveloped areas exchanged for extensive economic development, and developed countries realize the circular accumulation of capital with a small amount of resource capital (Wang Yaxin, 2022).

Therefore, in the long run, underdeveloped areas will lead to excessive resource development, industrial structure imbalance, lack of quality of economic development, and so on. Therefore, developed areas will lack the endogenous impetus of economic growth, resource development and economic growth are excessively dependent on external factors, and the economic structure is relatively fragile. However, the balance of diffusion effect and reflux effect is a win-win choice of regional economic development. For example, in the era of globalization, cross-border investment should not only tend to resource development, but also tend to resource construction. New economic factors should be adopted to promote the construction of resources and the environment of capital flowing to underdeveloped areas, and realize the recycling of capital and resources in underdeveloped areas and developed areas.

So, in the case of limited investment resources, less developed areas should implement unbalanced development strategy to seek its economic development, namely first concentrate capital in direct production activity department to increase output and input, after these departments obtain investment benefits, reuse part of the income investment in infrastructure sector to promote its development, and noted that there are two effects between regions: "polarization effect" (with the "reflux effect"), with "trickle effect" or "drip effect". It believes that the former will widen the economic development gap between regions, while the latter will narrow the economic development gap between regions, and there will be a turning point between the two.

We also put forward the concept of regional transmission for the first time, which basically refers to the process of economic growth factors in developed areas being gradually transmitted to backward areas, and refers to the process in which some factors of economic development influence and affect each other and change the regional economic structure. The basic elements of regional transmission include the starting area of transmission, the receiving area, the transmission object, the transmission channel, the operation mechanism, and so on. The essence of regional transmission is the complementarity between regions under the action of comparative interest mechanism, forming the internalization of regional externality and regional internality in regional complementarity.

Conclusion

Therefore, in different stages of regional development, government macrocontrol is an important means to balance regional development. For example, in the early stage, the government should focus on investment and support the development of areas with superior resource factor endowment to realize the original capital accumulation; after consolidating the regional economic foundation, the government should actively promote regional coordinated development, adjust the industrial structure to promote regional economic structure reform, narrow the gap between regional and urban and rural areas, and realize the balanced development of regional economy.

References

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3. Wei Houkai (2008). We will further promote the choice of investment and financing policies for the western region development. Western Finance, (05), 6-10. DOI: https://doi.org/10.16395/ j.cnki.61-1462/f.2008.05.006

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