Clarifying the diversified spatial interaction in China's regional economic development is of great significance to explore the new concept of regional coordinated development in the new era. This paper constructs the spatial econometric model based on growth pole and central place theories, and studies the peer effects of urban areas in different income levels taking 260 prefecture-level cities in China as the research object, and explains the internal motive force of regional coordinated development from a new perspective. The results show that: (1) High-income cities have a driving effect on the economic growth of neighboring middle-income cities through positive peer effects, and have a dampening effect on the economic growth of neighboring trap cities through negative peer effects. The top-down radiation action between Chinese cities is not fully utilized. (2) Middle-income cities have positive peer effects on the economic growth of high-income cities, and trap cities have positive peer effects on the economic growth of middle-income cities, and there is a bottom-up economic growth promotion between our cities. (3) Economic growth between cities at equal income levels is mutually reinforced by positive peer effects. Further study finds that peer effects are largely due to the yardstick competition under decentralized fiscal system, and there is a significant heterogeneity in the effects of learning and competition mechanisms within cities with different income levels. Finally, the policy enlightenment of realizing regional coordinated development is put forward from the aspects of implementing a multi-central space strategy, building a new type of urban cooperation model, strengthening the infrastructure construction, and improving the performance evaluation system.