Developing countries are the main source of China’s foreign contracted projects (FCP). In reality, Confucius Institutes can enhance understanding and trust, build an information platform between China and foreign countries, which may promote China’s FCP development. Its personnel training can enhance building capacity of host countries, which may inhibit China’s FCP development. Taking 35 developing countries as examples, this paper analyses the influence of Confucius Institute on China’s FCP by panel data regression equation. The empirical studies indicate that the establishment of Confucius Institutes will inhibit China’s FCP development significantly. The host country’ population, political stability and itstrade relations with China, have positive and significant influence on China’s FCP; Its economic development level has“U”type of relationship with China’s FCP. Therefore, China should enhance the technical level and financing support of FCP, and further play Confucius Institute’s function as an information platform, so as to further promote the development of China’s FCP.