When FDI produces different kinds of technology spillovers, domestic enterprises choose different paths of technology process, which have different impacts on manufacturing structure. According to the existing literature, manufacturing industries are divided into high-technology, mid technology, low-technology. With 30 areas panel data from 1998—2014, high-technology manufacturing output value to mid-technology manufacturing output value ratio and Theil index estimate manufacturing upgrading and rationalization respectively. On the basis of which, we carried out empirical test by dynamic panel estimation (GMM) and the results show that imitation effect has a negative impact on upgrading and rationalization of manufacturing structure; competition effect inhibits manufacturing structure optimization. The further estimations of manufacturing upgrading and rationalization by fixed assets-net value prove that the results of empirical research are the same and robust.