With more and more developing countries implementing financial sector reform and allowing foreign banks access to domestic financial sectors in recent years, the debate around the influence of foreign bank entrance on economic growth causes great concern and heated discussion both in academic and political circles. Under the background of financial liberalization, with more and more foreign banks coming into Chinese domestic market, what kind of role foreign banks will play in economic growth of China? The purposes of this paper are to do a further research on the influence of foreign banks access on economic performance in China and to find out through which channels foreign banks may affect Chinese economy strongly and directly. On the basis of MRW model, I take the input of financial sector for a consideration. The econometric methods of this study are simple Ordinary Least Square (OLS) as well as some common empirical tests, such as Hausman test and I also use fixed effects and instrumental variables to do the estimation analysis. By using the data of 27 provinces of China in the period of 2005 to 2012, this thesis evaluates the influence of foreign banks access on economic growth of China under the framework of economic growth decomposition empirically. The research result is that foreign bank entry boosts Chinese economic growth rate significantly by using instrumental variables to eliminate endogeneity problem of foreign banks in the estimation equation. Over the years, economists have committed to explore the source of economic growth, while the first step is to break down the economic growth into various elements of the contribution rate. In terms of economic growth model, the primary elements of the contribution rate of economic growth in this thesis I talked about are the growth rate of TFP and capital per effective labor. The results of the regression show that foreign banks access helps a lot to TFP growth as well as capital growth per effective labor. Furthermore, the primary mechanism for foreign banks to increase the growth of real GDP per effective labor is to accelerate TFP growth, which is a major catalyst for economic growth in mainland China. The above findings suggest that introducing more foreign banks into the domestic financial market and relaxing the business areas of foreign banks, on one hand, can contribute China’s economic transition from extensive economy to intensive economy; on the other hand, they may help a lot to promote the sustainable development of Chinese economy.