People-to-people exchange has become a heated topic of the Chinese foreign policy. Since the beginning of the twenty-first century, China has established people-to-people dialogues with the United States, the European Union, the United Kingdom, France and Russia. In 2012, China and the EU established a high-level dialogue for people-to-people exchange, making people-to-people exchange the third pillar of China-EU relations. However, China is not a newcomer to people-to-people exchanges with Europe. Why does China launch the people-to-people diplomacy? Is it a plus or a must for China as well as for China-EU relations? The author reviews the history and current situation of China's people-to-people exchange and investigates China's motivations behind the policy. Using the historical institutionalism as an approach, this paper argues that people-to-people diplomacy is a key component of the contemporary Chinese foreign policy towards Europe. China has long been an unequal counterpart to Europe since the 1840s. After the development of bilateral political and economic cooperation in the past four decades, people-to-people diplomacy is the last part that China needs to finish in order to regain equal status with Europe. In addition, it is also a step towards realising the "great rejuvenation of the Chinese nation".