Over the past 40 years of reform and opening-up, China's economy has achieved a miraculously high growth rate. Most of the existing researches focus on revealing the experience of China's rapid economic growth, but ignore the phenomenon of frequent fluctuations accompanying the rapid economic growth. A complete theoretical explanation should not only explain China's rapid economic growth, but also answer the question of why the economy remains so volatile. From this point of view, the explanation based on local government’s behavior is undoubtedly more in-depth. This paper first sorts out many viewpoints to explain China's rapid economic growth and points out the success of local government’s competition theory. Then, from the perspective of local government’s behavior, the paper analyzes the fluctuations of China's economy in the past several decades, and finds that the "rational expectations" and "learning effect" of local governments are the root causes. The local government’s behavior is the key to the frequent failure of the central government's macro fine-tuning. Finally, from the perspective of correcting local governments’s behaviors, this paper puts forward that adapting to the new environment, building new power and expanding new space are the inevitable paths to promote China's economy towards high-quality development.
