Abstract:This article is based on the perspective of central-local relations with Chinese characteristics, theoretically analyzes the influence mechanism of the first batch of industrial transformation and upgrading demonstration zone on the local two-stage development. With panel data of more than 270 cities in China from 2007 to 2019,synthetic control method is used to evaluate the policy effect of the construction of six typical industrial transformation and upgrading demonstration zones. The research conclusions are as follows: The effects of the policy are highly heterogeneous for different pilot cities, and can be divided into three categories: painful restructuring group, Including Zibo, Changzhi, Jilin; innovative single bonus group, Including Shizuishan and Loudi; innovative double bonus group, Including Zigong. The empirical findings remained valid after multiple testing by temporal placebo, regional placebo, and difference-in-differences method.