As Chinas economy gradually goes into new normal，innovation will have a significant impact on economic growthBased on the review of
Schumpeterian competition and Aghions analytical method about innovation，this paper builds a theoretical model of China to explain the interacted relationship of innovation，adjustment of industrial structure and economic growthTheoretical model finds the mechanism about the influence of innovation on economic growthThe mediation mechanism is the adjustment of industrial structureBy empirically analyzing Chinese provincial panel data from 1998 to 2015，we find the estimation result of our model is well consistent with the conclusions from theoretical studyInnovation has a significant impact on economic growth by mediation of industrial structure adjustmentThis conclusion is robustCompared with the eastern region，the influence of economic growth on innovation is bigger in central and western regionsEastern region has an advanced stage of innovation and it is easy to encounter bottlenecksIn order to realize Chinas long economic growth，we need highlight the role of innovation in economic growthThe process that innovation drives industrial upgrading and transformation must contain appropriate institutional environment