Abstract: Technological innovation is the source of vitality for economic development and the strategic support for the construction of the modern economic system. Under the theoretical system of Chinese style fiscal decentralization, based on the panel data of 230 prefecture level cities in China from 2004 to 2016, this paper studies the impact of urban fiscal autonomy on the micro and macro differentiations of technological innovation. The results show that：(1) the improvement of urban fiscal autonomy has not effectively promoted the overall level of technological innovation of the cities. Although the improvement of fiscal autonomy can promote the improvement of local fiscal revenue, the change of the total quantity has not effectively optimized the distortion of the structure of fiscal expenditure. The long-term shortage of social expenditure in the fiscal expenditure will hinder the improvement of the overall level of urban technological innovation. (2) The improvement of urban fiscal autonomy has effectively promoted the technological innovation of industrial enterprises. The main reason lies in that the improvement of financial autonomy can effectively enhance the technological innovation of industrial enterprises by directly increasing the financial subsidies to them. Therefore, local governments should optimize the fiscal decentralization system, deepen the reform of fiscal and tax system according to local conditions, scientifically formulate subsidy policies, and improve the innovation efficiency of the cities and industrial enterprises.

Key words: urban fiscal autonomy, technological innovation, financial subsidies, financial expenditure structure