Abstract:The technical efficiency of China"s grain producing among regions was significantly different. The northeast, north, south and the Yangtze River regions were showing higher level, while the northwest, southwest and south were in lower level. This paper selected grain production and agriculture sector capital investment panel data from 30 provinces with the year of 2001 to 2011 to research the spatial location heterogeneity, the degree of spillover and diffusion level between technical efficiency of China"s grain production and the agricultural sector capital investment. The results showed that the technical efficiency of China"s grain has obvious spatial concentration; capital investment had significantly influence on technical efficiency space diffusion; with spillover of capital and technology, the imbalance in food industry will become increasingly serious. As to this issue, it should to focus on strengthen agricultural capital investment in northwest, central and southwestern regions to accelerate the pace of development of agricultural technology.#$NLKeywords: agricultural technical efficiency; technology diffusion; spatial correlation; panel data