The entry of China in the World Trade Organization (WTO) in 2001 holds a number of promises for educational services. The purpose of this article is to explore both the direct and the indirect influence of China's entry into WTO on its education system. The direct influence mainly refers to the increase in the demand for education overseas and in the number of foreign students studying in China, the cooperation between China and educational institutions overseas, and China's administrative and legal frameworks for education. As to the indirect influence, the article focuses on the impact of economic growth on public and private expenditure on education, of income growth on demand for education and of changes in industrial structure on educational output. On this basis, the article examines the challenges that China's education system will face following its entry into the WTO.