AbstractThis paper analyzes the changes of comparative advantage of China’s export industryusing Chinese trade data from 1987 to 2010. Trade data are from UN Comtrade, while GDPand other data are from the World Bank. The revealed comparative advantage (RCA) indexis used as a measure of comparative advantage, and Markov transition probability matrix andpseudo Lorenz curve are used in examining the changes of China’s comparative advantage. The results are as follows. First, the Chinese share in the world export market was only1.86% in 1987, but this has increased rapidly to 10.97% in 2010. Now China is the largestexport country in the world. Second, Chinese comparative advantage of its export industryhas changed from a labor intensive industry to a capital intensive industry, and from a lowtechnology industry to a high technology industry over time. However, China still has thehighest comparative advantage in the low skill labor intensive industry. Third, Chinesecomparative advantage industries have changed more than the advanced countries, and havediversified over time. Lastly, results from the gravity model show that the industries, whichexhibit comparative advantage, contributed to the rapid increase of Chinese exports.