Abstract: Based on the non-radial and non-angle SBM direction distance function and Malmquist-Luenberger productivity index, this paper calculates the Green Total Factor Productivity(GTFP) indicators of 30 provinces, municipalities and autonomous regions in China with industrial waste water and gas emissions as unexpected outputs included in the calculation process, and analyzes the effects of government intervention, environment regulation and their interaction effect on GTFP. Research shows the improvement of environmental regulation level can effectively promote the promotion of GTFP, but this positive promotion will be weakened once it exceeds a critical value, confirming the Strong Potter Hypothesis. In the region where government intervention is strong, the government incline to force firms to cut down pollution by administrative means, which results in misallocation of resources and is harmful to the improvement of firms′ GTFP; in the regions where government intervention is inferior, however, the local government tends to regulate by more progressive ways, which is conducive to firms′ green technology innovation and will have positive effect on GTFP. Therefore, in order to realize the coordinated development of economy and environment protection, government should properly design environmental regulations and reasonably grasp the degree of intervention in the market.

Key words: government intervention, environmental regulation, Green Total Factor Productivity