Abstract: Traditional economic promotion efforts by local governments are undergoing a fundamental shift. As various policy-driven investment attraction models become unsustainable, localities across the country are turning to the new model of fund-driven investment attraction. However, unless there is a fundamental transformation of government functions and the logic of competition, fund-driven investment attraction risks evolving from policy involution into capital involution, thereby continuing to hinder the formation of a unified national market. Local governments' choice of fund-based investment promotion stems from the combined influence of three constraints—institutional, capacity, and temporal—and represents a suboptimal choice and practical compromise under existing constraints. To truly break this deadlock, it is essential to simultaneously advance deep-seated institutional and systemic reforms, including the reform of local government functions. The correct path is to acknowledge the transitional nature of this approach and, through a comprehensive strategy of macro-level standardization, micro-level risk mitigation, and end-to-end service optimization, guide local governments toward a high-quality investment promotion model centered on institutions, services, and ecosystem. This will lay a solid institutional foundation for the construction of a unified national market.
