In 1978, the Chinas government decision of formalization and institutionalize the open door policy, including the acceptance of foreign loans and investment capital, was an epoch-making one. Under the reforms and open door policy launched in the late of 1979, China has forged strong ties with foreign business which have played a significant role in increasing trade, in particular of exports. The character and structure of Chinas foreign trade have been changed with the formal adoption of the open door policy in 1978. Hence, the objective of this study is to examine the open door policy effects on Chinas trade growth. Specially, to analyzes the foreign investment impacts on the Chinas export performance. The second objective of this is to analyze the export performance using Constant Market Share model, and the third objective is to investigate the change in competitive advantage of Chinas labor intensive manufactures using Revealed Comparative Advantage index. The main empirical results of this study are following: (1) Chinas open door policy effects on the changes in its foreign trade. The structure of Chinas export have been improved in increasing the share of manufactured goods. The power of competition of export goods has been increasing by the foreign investment. (2) Chinas trade has been successful in increasing the market share with respect of all commodity goods under reform of foreign trade system and open door policy

(3) The powers of competition effect and commodity composition effect of merchandised exports were improved under open door policy, particular, Chinas labor intensive manufactures have revealed competitive advantage of the rest of the world. The study also found that the Chinas political situation impacts on its economy especially for the foreign investment environment and foreign trade.