Abstract:Based on the environmental total factor productivity which considers “good” output and “bad” output together, this paper uses directional distance function, further divides the “good” output into “tangible” output and “service” output, measures China’s regional total factor productivity index and its compositions from 1995 to 2010 under 3 different degrees of industrial structure regulation, and tries to explain the reason of China industrial structure regulation degree in reality. The main conclusions are: Industry structure regulation should emphasize on stable economic growth; Developing producer services can promote economic growth effect of industrial structure regulation; The economic growth rate of eastern region is lower than middle and western region in China, but contrary to the economic growth stability. China’s industrial structure regulation degree in reality is the result of the game between 2 sides.