Since the 1999 budget reform, and for the first time in China, local people's congresses (LPCs) have begun to exert “the power of the purse.” Based on our fieldwork and survey, we argue that while LPCs have strengthened their budgetary oversight since the reform, they continue to employ a strategy of “embeddedness.” Although certain LPCs have become more contentious, they tend to veil contestations in bureaucratic negotiation in order to avoid uncontrollable budgetary conflicts. The strategy adopted by LPCs in budgetary oversight provides a case for examining the recent debate over the behaviour patterns of LPCs in legislative oversight.