Hsieh and Klenow proposed a model to measure the efficiency of total factor productivity and resource allocation in 2009, and Gong Guan and Hu Guanliang expanded the model in 2013.This paper extends Hsieh and Klneow's model further and constructs a new model of monopolistic competition for heterogeneous product. Based on this model, this paper studies TFPs of manufacturing industry and explores deep factors affecting the overall TFP growth from the point of the efficiency of resource allocation and technological progress with the methods of Olley and Pakes. The following conclusions are made. First, the overall TFP growth rate is 4.93% in the period from 2001 to 2007, and TFPs are relatively high in central and Western China while TFPs in eastern China are relatively low. Second, because of the declining of both the capital allocation efficiency and the labor allocation efficiency, there is a significant decrease of TFP after 2007.