Regional competitiveness was an important concept and it challenged traditional regional theories. However, there were few papers discussing the relation between regional competitiveness and eco-economic level, so It was a daring attempt to do it. In economics economies usually used Production Possibilities Set to analyse the question of Product Mix. In fact, there was also substitutional relation between economy and ecology. With the research of regional competition based on the ecological significance, the definition of free space of economy was proposed, and a conclusion was drawn that regions with big free space was competitive. Through the static and dynamic model, another conclusion was acquired that the technological progress may determine potential regional competitiveness. In the demonstration research, factor analysis was used according to thirteen indexes, such as ecological level, Per capita GDP and technology progress, etc., we ranked the level of eco-economic and the regional competitiveness of thirty-one provinces (municipality duchy) in China. The results show: the regional competitiveness decreased from east to west in China according to their economic and entironment levels. Although some regions had poor entironment, they have technical superiority and economic superiority, so that these regions ranked high. On the contrary, some other regions had ecological advantages, but due to backward technology and economy they ranked low. The regional policy in developing region and the relationship between equal and efficiency were also discussed. based on the ecological significance. Because developed regions derive not only a financial benefit but a ecological one, the developing regions should be given more helps. For developing region, on the one hand investment abroad should meet with warm reception, on the other hand, foreign-funded enterprises that polluted environment should be refused. In a word, the former theories and policies of region should be studied again.