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Based upon a county level analysis, this article explores the complex processes of poverty mis-targeting in China and supplements the pre-existing literature with a bottom-up analysis. It argues that the rational calculations of key county leaders, shaped by a combination of formal and informal institutions, determine whether a county, irrespective of poverty level, competes for the title of “state-designated poorest county (SDPC).” This article also demonstrates that the interaction between formal and informal institutions is dynamic and subject to change. For future relevant research, this article suggests to analyze the practice of poverty reduction in a disaggregated manner by examining the interplay within and among different levels of government. [ABSTRACT FROM AUTHOR]