While students of Chinese politics have long been interested in the impact of fiscal and administrative decentralization on patterns of governance in China, few have examined the impact of decentralization on political dynamics within the local state. Focusing on the county—the level of government primarily responsible for delivering public services, managing local state-owned enterprises, and coordinating the economy—this article explains how the pressures and incentives associated with decentralization have changed the "rules of the game" at the local level. It argues, in an in-depth study of a rural county, that local politics is driven largely by a competition over spoils and that competition over spoils is organized around a relatively stable system of factionalism. The first part of the article examines the emergence of local factions in County X and their relationship to the formal institutions of Party and government. The second part examines the resilience of local state factionalism and its implications for central government control and one-Party rule.