There has been a controversy that whether government R&D expenditure can promote R&D innovation and how to play the role of government more effectively in the process of innovation. Based on theoretical analysis, the paper puts forward the effectiveness of government R&D funding in promoting enterprise innovation and the heterogeneity of incentive effect. Based on the data of industrial enterprises' scientific and technological activities this paper examines the effect of the Chinese government R&D funding on the R&D innovation activities of the enterprises. On the whole, the government R&D funding will promote the enterprise's own R&D expenditure, and it will also improve the level of output of the patent and the new product. There are heterogeneities of enterprises in the incentive effect of government funding, the greater the enterprise scale, the higher human capital level and the higher labor efficiency, the greater the effect of the government R&D funding, and the R&D output of the nonstateowned enterprises is higher than that of the stateowned enterprises. In addition, the output of scientific and technological activities is more dependent on the contribution of R&D personnel. When the government subsidize the R&D activities of enterprises, it should make targeted subsidies policy according to the specific micro characteristics of the enterprises.