Abstract: In the principal-agent relationship between the central government and the local government, the local government, as an agent, plays the role of the actual executor of environmental regulation and the actual executor of industrial overcapacity governance.In the case of asymmetric information and inconsistent goals between central and local governments, the behavior, motivation and motivation of local governments are not only affected by the administrative performance appraisal system and official characteristics of officials, but also by the economic growth goals set by local governments and local financial revenue and expenditure.Based on the data of 30 provinces in China from 2001 to 2015, this paper constructs a static panel model, and uses the stochastic effect model method to study the impact of economic growth goals, environmental regulations and their interaction on capacity utilization.It is found that the economic growth goal can significantly improve the level of industrial capacity utilization; the impact of heterogeneous environmental regulations on industrial capacity utilization varies with the type of regulatory tools and regions; the national and Eastern cost-based environmental regulations can significantly improve the level of industrial capacity utilization; only environmental penalties in the western region can help to improve the level of industrial capacity utilization.The interaction between economic growth goal and cost-based environmental regulation restrains the utilization rate of industrial capacity, while the interaction between economic growth goal and environmental punishment in the western region reduces the utilization of industrial capacity. The interaction between economic growth goal and environmental regulation is not significant.

Key words: Key words： economic growth target, heterogeneous environmental regulation, industrial capacity utilization