Inter-jurisdictional water resource issues constitute a growing political and economic challenge in China. This article examines three such cases of hydropolitics, namely large dam construction, water resource allocation, and downstream water pollution, through the lens of central–local relations. It argues that the hydropolitics in China are characterized by the pursuit of localized preferences within the constraints imposed by a centralized political system. In each case, the primary actors are sub-national administrative units, who adopt various competitive strategies to pursue their own localized interests at the expense of neighbouring jurisdictions. This article argues that although vertical control mechanisms in the Chinese system effectively limit central–local preference divergence, they do little to contain horizontal conflicts between sub-national administrative units. The paucity of formal inter-jurisdictional dispute resolution mechanisms is a major barrier to meeting water resource challenges, and inter-jurisdictional collective action problems are likely to pose growing difficulties for the Chinese political system.