The cause of resources misallocation mainly emanates from the distortion of enterprise heterogeneity with different dimensions and regional development strategy. This paper uses C-D to determine frontier parameter model to calculate total factor productivity of enterprises, uses OP covariance method to calculate resources misallocation extent of different regions, and further analyzes the cause for China’s resources misallocation from such two perspective as enterprise heterogeneity and regional development strategy. The results show that the firm TFP heterogeneity is mainly correlated with the differences in market structure, regional differences and ownership, and that local governments' development strategies that violate the comparative advantages deteriorates provincial misallocation, leading to 15.0%-52.7% resources misallocation loss, 12.8%-45.1% of TFP loss and 2.4%-8.5% of GDP loss in different provinces. China’s future TFP improvement should pay attention to the internal competition optimization and let the guiding role of the local government be played.