As one method of economic intervention by redistributing fiscal resources among entities，government subsidies can help to remedy the market defects，stimulate economic development，and carry out industrial policies.The extant literature focuses on the determinants of the allocation and the impact on firm performance of government subsidies.When classifying the sample based on marketization index，this study finds that for firms located at regions of high marketization index，government subsidies can help to alleviate under investment；while for firms located at regions of low marketization index，government subsidies aggravate over investment.When further classifying the sample based on firm types，this study finds that the alleviation of government subsidies on under investment concentrates on SOEs in regions of high marketization index，while the aggravation of government subsidies on over investment concentrates on non SOEs in regions with low marketization index