Over the last decade, rural township governments have been subjected to intensive streamlining and rationalization programmes. This article examines which ongoing reforms and processes are causing township governments to become "hollow shells", and explores the effects of "hollowing out" on township government leaders, staff and rural residents. While the aim of local government reform was to transform extractive township governments into "service-oriented" agencies, this article finds that the current logic of rural governance has produced township governments which are squeezed from above and below. From above, township leaders face the political imperatives of inspections, annual assessments, the need to attract industrial investment and an ongoing process of "soft centralization" by higher levels of government. From below, township staff are drawn out to the villages to enforce family planning policies and maintain social stability. Unprecedented numbers are working as "sent-down cadres" in villages where their capacity to deliver services has been weakened by village amalgamations and the lifting of agricultural taxes and fees. Despite significant boosts to rural health and education investment, rural residents still face a level of government that regards them as problems to be dealt with, rather than citizens to be served.