Since the reform of Tax-Sharing system, the competitive project allocation adopted by the central government in financial redistribution and macroeconomic control has formed a unique project system. In this system, the project competition launched by local governments to obtain financial resources has had an impact on the green transformation and development of industry through income effect, resource allocation effect and crowding out effect. The empirical study results based on China's provincial panel data from 2002 to 2017 show that: the project system inhibited the development of green industry, and had different degrees of inhibition on the development of green industry in the eastern, central and western regions.The inhibition degree in the western region is higher than that in the eastern and central region. Standardizing the government's competitive behavior can weaken the negative effect of the project system to a certain extent and encourage green development of industry.