Abstract: By making use of the health index of the political-business relationship and the data of China’s listed companies from 2013 to 2017, the paper makes an empirical analysis of the influence of the intimate and clean relationship between politics and business on corporate innovation. The findings show that the intimate and clean relationship between politics and business can promote enterprise innovation. The results of the further research indicate that the intimate and clean relationship between politics and business will have different impacts on corporate innovations, if the enterprises have different nature of property rights and belong to different industry. The intimate and clean relationship between politics and business can promote corporate innovation through the four mechanisms, i.e., increasing corporate bank loans, government subsidies, tax incentives and reducing rent-seeking costs. The research conclusions provide a new idea for promoting enterprise innovation.

Key words: the intimate and clean relationship between politics and business; enterprise innovation; bank loans; rent-seeking costs