China’s rapidly ageing population and ongoing economic transformation require an understanding of how China’s pension system has developed and what challenges lie ahead. The modern pension system, a combination of multiple international models, remains tied to the decentralised political and economic structure under which it came into being in the 1990s. Decentralisation has led to a race to the bottom between provinces and municipalities to lower pension contributions, and continues to stymie efforts to centralise or rebalance the system away from capital- and labour-inflow provinces that have more young workers and greater pension surpluses. Policies such as expanding financial investment of the public portion of the system—basic pension funds—point to efforts to address population ageing issues and economic transformation indirectly, i.e. without addressing some of the structural imbalances created by a lack of national pooling. This article provides an overview of China’s pension development, placing it in the context of theories of decentralisation, and looks at how this development informs and influences current policy debates.