Abstract: The world economy is suffered by the global financial recession caused by America's subprime crisis. Nowadays the government’s priority is to promote regional economy. The paper theoretically elaborates the dynamic evolution mechanism of government spending and sustainable economic growth, and examines the impact of government expenditure structure and government expenditure scale of a panel of 58 countries of Zhejiang province from 2003 to 2012 on the regional economic growth. Our research shows some long-term stable support from private investment, labor population, and government expenditure to the economic growth. Based on the results of static regression model, the private investment, labor population and government expenditure are positively and significantly correlated with economic growth; private investment is found to be the biggest contributor to the growth of economy either in long term or short term; the consumption expenditure has more influence on economic growth than education expenditure and technology expenditure both in long term and short term; comparing with technology expenditure, education expenditure apply more positive impacts on economic growth in a long run and more negative impacts in a short term. According to the experimental results of Error Correction Model, we can also show that government expenditure has a strong positive effect on the growth of regional economy.