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In many complex electromechanical systems, fault propagation between nodes always leads system-level BIT false alarms. Therefore, this paper aims at reducing system-level BIT false alarms based on the research of small-world properties of fault propagation in large-scale systems. Firstly, find out community centers in the system which has small-world network properties, and then divide the system into several communities based on the improved Wu-Huberman algorithm. Subsequently, the hierarchical decomposition technology is used in the alarming community, to recognize system-level BIT false alarm according to the fault propagation influence degree between nodes. At last, the false alarm recognition performance of the method studied in this paper is validated by the application of a stabilized tracking platform system.