Along with global urbanization, urban spatial growth has become a hot field in the research of urban development, in which is derived from different schools, such as neo-classical urban economics, new economic geography and neo-Marxist geography. Since reform and opening-up, urban spatial area in China has grown fast with the rapid development of economy and urbanization, which increasingly arouses the attention of economists and geographers of China. In recent years, there are more and more articles focusing on China's urban spatial growth with the application of foreign theoretical models. Existing theoretical models and empirical analysis, however, do not reveal the unique and fundamental power factor which promotes the rapid growth of China's urban space, especially ignoring the key role of local governments which is the unique phenomenon during the rapid process of urbanization in China. In the context of an urban-rural dual structure of the land market, the local governments, especially the city governments, play a decisive role in the process of urban land development and urban spatial growth. Based on the involved theoretical model of urban economics, this research attempts to conceive an urban economics model introducing the key role of local governments in order to analyze the China's urban spatial growth and interrelated issues.