There exists a remarkable "tidal bore" phenomenon in China's industrial investment, and the congestion of industrial investment and projects has caused severe excess production capacities during an extremely short time span. This kind of tidal bore in industrial investment, having both advantages and disadvantages, is the product of information asymmetry between the innovation externality and market, and also a popular phenomenon accompanying with industrial innovation. At China’s present industrial stage, the insufficiency in both industrial innovation capacity and investment system reform has further enlarged the adverse effect of tidal bore, expanding the excess production capacity into overall industries and a long term trend. This being recognized, solutions to excess production capacity should not only rely on “blocking”, but on accelerated system reform and enhanced industrial innovation capacity. Thus the overall quality of the industry will be improved through this means of “focusing on facilitating while also adopting blocking when needed”.