This chapter is divided into two sections. Drawing on official documents and literature, the first section examines the historical relationship between the government and teacher education institutions (G-TEIs) from the planned economy era to the market-oriented economy era, highlighting three defining features: government-led management, a balance between government supervision and university autonomy, and synergistic collaboration between the government and universities. These interactions have significantly influenced the goals, structure, and practices of teacher education, fostering educational innovations. The second section presents a case study on an innovative teacher education model: the U-G-S model, proposed and developed by Northeast Normal University (NNU). This model exemplifies the partnership between local governments in Jilin Province and NNU (both located in Northeast China) to foster teacher education innovation in the market-oriented economy era. It also illustrates how primary and secondary schools transitioned from peripheral roles to key participants in this developmental process. Drawing on Holzinger and Knill’s (J Eur Public Policy 12(5):775–796, 2005) framework of transnational policy coordination, this chapter underscores that the evolution of the Government-University (G-U) relationship and its impact on teacher education innovation are intrinsically shaped by shifting political-economic contexts. The authors trace three overlapping phases: (1) policy emulation of the Soviet model during the planned economy era, (2) lesson drawing from Western approaches (particularly the American model) in the market economy period, and (3) developing distinctive education innovations with Chinese characteristics. Rather than abrupt transitions, these phases reflect a dynamic synthesis of global knowledge and localized adaptation. Driven by this relationship, teacher education reforms now prioritize adaptive innovation, context-specific designs, and globally informed practices—exemplifying how strategic transnational policy coordination catalyzes sustainable education innovation.