This chapter studies the formation of the new national and provincial elites during the era of Jiang Zemin. The focus is on two trends that have been unfolding in parallel, but in tension with each other. The first trend is growing political localism; the second is the strengthening of institutional control in an attempt to limit the abuses of power based on local interests and personal political networks. Political localism is stronger and more legitimate today than ever before in the history of the People's Republic of China. Indeed, more generally, through the reform era – but especially since about 1997 – conflicts of interest between regions, factions, and social groups have come more out in the open than ever before. At the same time, new institutional mechanisms have been put in place to limit favoritism and abuse of power by particularistic (including localistic) interest groups. The central government has made continual efforts to coordinate the multifaceted political demands raised by various regions and by new socioeconomic forces in this fast-changing country.

China's political and economic life during the Jiang era is filled with several seemingly contradictory trends. This is particularly evident in the recruitment of political leaders. On one hand, informal networks are ubiquitous in the formation of the new leadership. These networks includ regionally based groups (tongxiang, or fellow provincials), particularly the notorious Shanghai Gang, and those based on kinship with top leaders in Beijing (taizi, or princelings). Such favoritism and nepotism, however, have also caused a growing public demand, especially from backward inland regions, for a more representative leadership.