In regional economic development, why are the Chinese local governments’ roles so different? Applying the quantitative method, we have compared the nominees of the five China Local Government Innovation Awards (2001-2010) and analyzed the inter-regional, inter-category and cross-year data of these nominees to probe into the correlation between the economic growth and the local government innovations in the eastern, central and western regions of China. The number of innovations of the local governments in the eastern region is far above that in the western and the central regions, and the number is greater in the urban area than in the rural area, both of which indicate the relationship between innovative ideas and economic growth. There is a significant inter-regional difference in the innovation types. The eastern region, with a higher level of economic development, centers around administrative innovations to meet the demand of market institutional development. One strong incentive to the political innovation in this region is economy. At the same time, its public service innovation is more effective than that in the western and the central regions. The central region has more political innovations; however, the governments in the western region show greater vitality in all kinds of innovations than the central region. Correlation Analysis has testified the significance of correlation between the administrative innovation and the economic growth. We also find that with economic development the local government innovations have gradually switched from political reform to administrative management, but attention has not sufficiently been paid to public service innovations. Therefore, the regional economic growth gives the local governments an endogenous incentive to innovate and there is more vitality in innovation in the developed areas than the undeveloped ones. On one hand, government innovations have greatly promoted the local economic development and regional marketization process and provided the necessary local experiences for the overall economic institutional reform. On the other hand the local government innovation becomes the crucial element for Chinese government innovation. The policy implication of this research for Chinese social transformation is that the state government should ensure greater policy incentive and leave institutional space for local government innovations in their regional development. China’s central government should set up an overall and top-down system of power decentralization and provide the institutional incentive for local governments to implement public service and political innovations. At the same time, the central government should put stress on local innovative autonomy which generates the ability to solve local problems. China cannot rely on the local economic development alone for its innovation incentive. Rather, it must push for the reform of political decentralization so as to guarantee the central authority and local autonomy.