Abstract: The Jiaozhou Bay Incident occurred in the end of 1897 had a great impact on China’s historical course after the Sino-Japanese War of 1894-1895. It brought a great test for the reform movement which was just initiated at that time. Young intellectuals such as Kang Youwei and Tan Sitong generally believed that China had fallen into a crisis of life and death. With reference to new and old documents, a careful analysis of the sequence of events, cause and effect of the Jiaozhou Bay Incident will reveal that there was little political hue of this incident. Germany had intention to set up a naval base in China so as to effectively protect its benefits in the Far East and its investment in China and seek the counter-balance with big powers. The Chinese government didn’t absolutely reject the requirement of Germany, but it had not found a win-win solution to this issue.