Government spending in China hinders capital inflows, science investment boosts economy.
The study looked at how the size of the government in different regions of China affects the flow of money into those areas. They found that when the government spends a lot on building things and running the government, it actually makes it harder for money to come in. But when the government invests in science and technology, it attracts more money. Having well-educated people, good financial systems, and open trade also bring in more money. On the other hand, high taxes and labor costs make it harder for money to flow in. The study suggests that China should reduce government spending in some areas and focus more on science and technology to attract more money into different regions.