An interactive confluence of top-down state interventions and bottom-up market forces has driven a surge of plastic-mulched farmland (PMF), especially in dynamic peri-urban agricultural landscapes, with significant implications for global food security. Nevertheless, there is a dearth of literature regarding the comprehensive policy-market mechanisms on the diffusion of plastic greenhouses. We combine the strength of spatial lag Tobit and boosted regression tree (BRT) models to examine the respective roles of policy and market, as well as their intrinsic interactions in facilitating PMF growth. Our analysis reveals that both state promotion of food localization policies and spatial proximity to markets increase the intensity of PMF, and market-driven forces are confirmed to be the preponderant determinant. State investments in city-region vegetable production bases exert a moderating effect on market-PMF linkages by alleviating market constraints on greenhouse adoption in remote farming regions, while direct policy effects show heterogeneity with different road accessibility, signaling a complex interplay in the interaction mechanism. The counterfactual simulation further emphasizes a synergistic effect of policy-market confluence on PMF expansion, suggesting a robust combination of state interventions and market mechanisms. We conclude with insights for planning strategies of greenhouse agriculture and peri-urban farmland use, which sheds light on the spatial management framework for regional food systems.