Harvard University professor Joseph Nye divided a country¡¦s comprehensive national power into hard power and soft power. A country¡¦s national interest ovelap each country and the interaction with countries become more frequent and close under the globalization. A country not only pursueds its own hard power, but develops its soft power. With soft power has become the core value in the international society, the effect of soft power has become the key stratergy to a country¡¦s foreign relations. Moreover, soft power has been China¡¦s foreign relations strategy. This paper analyzes how China uses foreign aid policy and Confucius Institute to achieve the efficacy of soft power. To analyze China¡¦s foreign aid policy and Confucius Institute¡¦s overall arrangement stratergy, and compare the different efficacy of soft power of the role of foreign aid policy and Confucius Institute. China¡¦s economic grows fast since 1978, but how to avoid the other countries fear and misgiving is a big challeange for Chinese government. Chinese government emphasizes peaceful development and develops a country¡¦s soft power to build more advantageous international environment.