Abstract: The implementation of the "Regulation On Fair Competition Review" marks the first time China has regulated local government investment promotion activities through administrative regulations. Faced with fiscal pressures and policy constraints, government-guided funds have become a key tool for local governments to leverage social capital and attract industries through models such as "attracting investment with capital" and "linking investment with promotion." Government-guided funds serve as policy instruments for strategic implementation and represent a form of governance innovation in China, gradually becoming a major driver of local economic development. However, some regions have distorted these funds into mere policy toolkits, deviating from the State Council's overarching design philosophy that government investment funds should "guide social capital and optimize resource allocation." To achieve a dynamic balance between the functions of government-led funds and local development needs within a framework of fair competition, it is necessary to establish a four-pronged collaborative system comprising "strategic stratification and dynamic adaptation mechanisms, value co-creation and risk-sharing mechanisms, evaluation optimization and long-term constraint mechanisms, and ecosystem construction and factor aggregation mechanisms." This will ultimately facilitate a fundamental shift from "blood transfusion-style investment promotion" to "blood production-style innovation."
