The article addresses the important issue of the bianzhi system and the role this system plays in governing China at the central and the local level. In making a critical distinction between nomenklatura and bianzhi, loosely translated as “establishment of posts,” the article provides a new perspective on key issues and concepts in the Chinese administrative reform process. The ultimate aim of the process is to create a leaner and more efficient public sector by shedding non-essential functions and by downsizing the bureaucracy. Two cases are used as illustrations of the issues and problems involved. The first is a discussion of central-level reform with a special emphasis on the reorganization of the Ministry of Personnel in 1998. The second is an analysis of local reform with a focus on the experiment of “small government, big society” in Hainan province. Both cases illustrate the difficulties in sustaining administrative reform. Discarded public administrative functions tend to re-emerge, displaced bureaucrats will seek to return to their former position and the Party is reluctant to allow the creation of better public administration at the expense of Party control.