As a vital documentation for assessments, rewards and punishments in terms of political promotions, the intellectual property pilot city policy (IPPC), an strategic incentive measure to enhance innovation capacities at the city and firm level, may play a prominent role in innovation fostering in China. Yet patent bubbles that focus more on quantity over quality have been thrown into doubt, as local cadres and firms shall pay more attention to the easier observable low-quality innovation performance amid the pressure of political task. this paper conducts an investigation that drew upon listed firm data from 270 prefecture-level cities and employs a PSM-DID design to evaluate the IPPC policy effectiveness on innovation quality and innovation quantity. The results are obvious: The policy have boosted the number of innovations, but has a limited effect on improving the quality of innovation. We further apply a hierarchical liner modeling approach to deal with the stratified cityand firm-level data and to verify the mechanism through which policy distortions may affect corporate innovation. There also gives evidence that the IPPC policy comes into effect mainly through financial subsidies, institutional supply and the intensity of IPR protection at the local scale. This report concludes by proposing further policy implementations for the future optimization of China’s innovation strategies.