This article examines China’s Confucius Institute program, a significant language policy/planning initiative. It adopts a political perspective in looking into the birth of this language policy initiative, focusing on its role in reconstructing China’s national identity in the context of its rise and its international relations. The study explores the background against which the Confucius Institute initiative was formed, and analyses how this initiative was received in the West and how China responded to it. It argues that China is undergoing a reconstruction of its national identity and the Confucius Institute initiative is a major part of this effort. It is suggested that such a reconstruction of national identity is an interactive process with an outcome resulting from China’s negotiation with the international community, involving China stating a new position, listening to international responses, clarifying and elaborating upon its position until its new position is accepted by the international community.