RFID is a core technology supporting the development of IOT technology. The healthy development of the RFID industry is of great significance to enhance the level of social information and the development of innovation-based economy. China's RFID industry is at its embryonic stage, facing the lack of innovation power and core technology. In order to solve these problems, the paper analyzed the key elements which promote the innovation of RFID and their operating mechanism, and then set the system dynamic model of RFID's innovation system. At the end, the paper raised some countermeasures based on the analysis of the feedback loops .and applying system dynamics method to establish the system dynamics model of the RFID industry innovation system, and the corresponding countermeasures and suggestions based on the analysis of the feedback loops.