Abstract:Local Government struggles for financial resources in order to obtain economic benefit and political performance so that regional financial competition forms. Based on the spatial panel data of 29 provinces from 1997 to 2016, this paper makes an empirical study on the objective existence of financial competition. China has complementary style regional financial competition, i.e., each region uses the same or similar behavior to conduct financial competition. Presently, the financial competition methods of Chinese local governments trend to diversification and continue to be renewed with economic development environment evolution. From using administrative power to directly meddle in credit resources allocation of state-owned banks to building strong local finance, the administrative departments (local financial office) implicitly arrange funds or policy promotion for financial recourse struggle (regional financial center). Central and local governments should reasonably divisionalize the power and the responsibility to properly guide and restrict the behavior of local governments in order to avoid excessive financial competition between regions, meanwhile properly deal with the relation between government and market, so as to realize rational allocation of financial resources by the combination of government guidance and market efficiency and by deepening local financial reform to activate and standardize local financial development.