This study argues against the view that the capacity of the central state has declined in the reform era in China. It examines how reforms have been introduced into the old system of cadre management to make it more effective, but also how higher levels of the party-state have improved monitoring and strengthened political control through promoting successful township leaders to hold concurrent positions at higher levels and by rotating them between different administrative levels and geographical areas. Its findings suggest that state capacity, defined as the capacity to monitor and control lower level agents, has increased. The reason behind the failure to implement some policies, such as burden reduction, is not so much inadequate control over local leaders as the centre's own priorities and conflicting policies. The Chinese party-state maintains the ability to be selectively effective in the beginning of 2000s.