Market rules determine that capital is always flowing to the areas which have higher investment gains. The shortage of capital formation is the direct cause for west areas to lag behind. Capital formation is restricted by low economic development level, low investment gain, financial restriction, backward economic system, low system innovation, high regional exploitation cost and so on. Development of capital market can promote capital formation in west areas. The main paths to develop capital market are system innovation, molding market investment main body, consummation of financial market, attracting private capital and raising scale and efficiency to use foreign capital.