This paper calculates the scale of false trade between China and other 32 countries from 2000 to 2012, whose conclusion denotes that the scale had been increasing up to 456.59 billion dollars from 15.67 billion dollar beyond 10% of the total trade scale. The scale of false reporting in import and export indicates a “U” type shape, and re-import trade and false trade from China to Hong Kong are both in a gradually rising trend, which can be explained by such that deposit rate and RMB exchange rate are still being controlled, RMB capital account is still unconverted, the trade statistics between countries are different, the micro-economic entities have strong motivations to chase interest and the evaluation mechanism of being oriental with GDP as a key indicator is accepted. Then, the negative effects of false trade are presented which includes that it can be harmful to the domestic financial ecology and restore the BOP, it stimulates the expansion of trade finance, it supplies a distorted incentive mechanism for the real economy and it can be resistance of transformation of economic development mode which is confronted with local government. Therefore, several effective measures should be taken to decrease the scale of false trade, which are that the regulatory approach should be changed, the international trade statistics mechanism be established, the up-limit of deposit rate and the fluctuation band of RMB foreign rate be elevated and the transformation of economic development mode be achieved.