By establishing a VEC Model,this paper examines the key drivers of long-term and short-term capital inflows in China during 2000-2007. The results of regression show that: rapid growth of Chinese economy and appreciation of RMB may bring in FDI, which can not be explained by CPI and interest rate differentials between China and US; increasing expectation of RMB appreciation and boom of Chinese securities market are driving short-term capital flushing into China; interest rate differentials have some influence on short-term capital inflows as well.