This study is a case study on development mechanism of economy between the local government and the private enterprise in Taizhou in the practice of the reform and opening in the past 30 years in China. This paper expatiates the history of development on the local government innovation and the private economy in Taizhou, analyzes the organizational structure of the private economy, outlined the system of private economy of Taizhou consists of The Industry Cluster, The Specialization Wholesale Market and Nongovernmental Money Market, saying that economy development and system growth in Taizhou is a historical process, the popular collaboration with the Government promote the development of the private economy in Taizhou. The basic economic logic of Taizhou Phenomenon is compose of The Private-dominated Economy, The Market-oriented System, The Government-promoted Development, The Institution-hold Regulation. The basic logics abovementioned offers the stage of economic development for the market system on the basis of the law of the value. Moreover, the cooperation between government and private serves as the economic drive. This kind of cooperation is characteristic of efficient market order.As for The Taizhou phenomenon, the industry clusters mass-based SMEs results the industrial chain with a specialization and collaboration, the industrial chain expand the production capacity of SMEs and strengthen SMEs local-rooted and intrinsic-growth. The Specialization Wholesale Market is an organization which joints the large number of small-scale home-made production and social needs together, it’s effect of scale make up the defects of small-scale home-made production, and strengthen the function of industry clusters, has evolved as the industry sector which take on the regional specialization of production and the value-creating functions. Nongovernmental financial market transform private individuals assets to the private enterprises into the financial resources, in addition to solves the small-scale enterprises sources of financing, but also makes the popular monetary active assets, nongovernmental financial markets has greatly make up deficiencies of the governmental financial system, the market performance of the Industry Cluster, The Specialization Wholesale Market, Nongovernmental Money Market is reflected through acts of entrepreneurs, the natural parts of entrepreneurs of Taizhou and their innovation ability demonstrated representation of the regional economy development. in essence, the differences from the natural parts of entrepreneurs lie on the market system and it’s the level of improvement, that is, in the regional economy is not lack of resources entrepreneurs, but the lack of resources that market system adapts to entrepreneurs.Because of decentralized decision-making business, market order can not be achieved self-maintenance. Local government’s intervention in Taizhou has a prominent characteristic of both boosting up the vitality of the private sector, and maintaining the market order, and transforms the private business acts into the development of common welfare by market system. The reciprocal economic relations of the private sectors and the producing political relations of constitute the core advantage of the development of Taizhou. The private entrepreneurs in the relations not only be good at discovering opportunities of market, but also finding that business opportunities on the back of regulatory barriers, market competition and governmental intervention achieves the double incentive to a group of political entrepreneurs. Popular-dominated Economy, The Market-oriented Institution, The Government-promoted Development, The Regulate-hold System build the interactive developing economic institutions between the private enterprises and government intervention in Taizhou. With the private enterprises growing and the improved the market economic system continuously, Taizhou local government begins to explore how to improve the services of the government to local economic development. Taizhou’s experience indicates that, effective market mechanism is not only allocating resources, adjusting supply and demand, and promoting competition, but also to advancing the effective cooperative system sequence of the popular and government.