China's economy has benefited from the two-wheel drive model of capital and labor for a long time since the reform and opening up. However, this model, which has been heavily relying on factors input, has been proved unsustainable. As China enters intoa new era, in order to adapt to the requirements of a high-quality development, we must use total factor productivity as a breakthrough to seek new impetus for our economic growth. Total factor productivity is proposed by Solow, the founder of the neoclassical growth theory in 1956. It is used to measure the role of technological progress, which embodies a country's technological innovation capability in economic development. However, inthis paper we argue that total factor productivity is not equal to the technological progress, because in most developing countries, the technology introduced by companiesthrough purchasing foreign patents and high-end equipment is actuallycombined with capital investments. This kind of growth has been counted into GDP. The substance of technological progress is not R&D innovations but introductions and imitations, so it is not advisable to equate total factor productivity with technological progress. Taking into the consideration of China's urban-rural dual structure, total factor productivity is also affected by the allocative efficiency of production factors such as labors, capitals, and lands. Therefore, the improvement of total factor productivity includes not only those achieved by the improvement of production efficiency at the micro-level, when enterprisesintroduces patents, technology and advanced equipment, but also those attained by the improvement of factor resources utilization efficiency and allocation efficiency at the macro-level,where factor optimization needs to be improved by economic efficiency and institutional innovations. If we look back to some stages of China's rapid economic development, we can see that total factor productivity is also the result of institutional innovation reforms and economic efficiency increase. Based on the above points, this paper constructs a VAR model, and selects four indicators(migrant workers, industrial capacity utilization rate, urban-rural income ratio, and research funding rate)from 2001 to 2017, to do the research of total factor productivity from the perspective of factor allocation efficiency and factorutilization efficiency,and attempts to figure out the mechanism behind it. Allocative efficiency of factors can be seen as a horizontal efficiency improvement, which is mainly influenced by the flow of production factors between urban and rural areas. While factor utilization efficiency can be regarded as a vertical efficiency improvement, which is primarily influenced by investment growth rate and R&D investments. We choose the number of migrant workers, urban-rural income ratio, industrial capacity utilization rate and research funding rate to represent it. As long as there is no excess production capacity, the improvement in capacity utilization can increase the total factor productivity; the expansion of the urban-rural income ratio is not conducive to the improvement of total factor productivity in the medium and long term; the increase in the number of migrant workers enables factor flow easier, hence the total factor productivity can be improved in the short term; R&D investments may reduce total factor productivity at the beginning, but after a period of time, its positive effects will gradually appear and contribute positively to total factor productivity. In the end, based on the research results, we put forward some policy recommendations for China's economic growth: Optimizie production capacity to improve factor utilization efficiency; Crack urban-rural dualization to improve factor allocation efficiency, and Strengthen the intellectual property protection system to promote innovation.