In the post-Mao era, the Chinese government carried out a series of education reforms to modernise education provision. This paper explores two related aspects of these reforms through comparative case study research in three different school locations within the same region in China. The first focus is upon system reform initiated through decentralisation and financial diversification that encouraged local governments to use multiple channels to improve their education services and resource provision. The second dimension concerns the national reforms for quality improvement intended to transform the examination-oriented system into quality-oriented education. Based on the comparative data and analysis, the findings of this research suggest that improving student academic performance in the key state examinations remains the top priority for schools, local authorities, teachers, parents and students. The processes of decentralisation and the development of a competitive educational market have left schools competing for funds and for students in efforts to secure an advantageous position in the education market place. In contradiction with the national policy this has reaffirmed examination orientation within Chinese schools and, as demonstrated by the case study comparison, has resulted in an increasingly stratified education system. (Contains 2 tables.)