China’s transition to the nation state, on a deep level, is incomplete. Tibet and Xinjiang remain the peripheral holdouts. At the policy level, the demise of class universalism deprives the central state of the institutional principles of legitimate government to project universal legitimacy in the two historically least incorporated regions. At the institutional level, the autonomous system has nurtured key conditions for ethnic mobilization for these two groups: politicized identities and ethno-territories. Among the contextual factors responsible the Soviet dissolution – core ethnic regions, weakening of previous social contracts, and democratization – only the Tibetans and Uighurs possess core ethnic regions and were particularly disadvantaged by economic liberalization due to their distinct ascriptive features. The absence of democratization, along with China’s demographic/territorial core, precludes a breakaway by these two groups, but large state outlays suggest continuing challenges for national integration. Despite various reform platforms, socialist autonomy – compromising autonomy but distributional benefits – remains the prevailing vision under the current political leadership. In the international arena, ethnic strife places constraints on China’s security and foreign policy behavior as well as on its international reactions.