The conventional model in studies of elite politics in China is that elite interaction is a game of “winner take all.” This research note proposes, however that a new feature of China’s elite politics in the twenty- first century is ‘power balancing”—a feature that has resulted from political institutionalization andfunctional djfferentiation. In an institutionalized environment, political rules and institutions play important roles. In a functionally djfferentiated system, power is not absolute and indivisible. Political leaders have power in instilulionally-defined and separable domains. This paper introduces a power-balancing model and makes a preliminaty attempt at applying it to current-day elite politics in China. Through preliminary analysis offive key events, this analysis suggests that political succession did take place at the Sixteenth National Congress of the Chinese Communist Party (CCP) when Jiang Zemin stepped down as General Secretary and was succeeded by Hu Jintao. The outcome of the first session of the Tenth National People’s Congress (NPC) and the first session of the Tenth National Committee of the Chinese People’s Political Consultative Conference (CPFCC) in March 2003 was also a balance between Hu Jintao and his allies on the one hand and Jiang Zemin and his associates on the other. Hu Jintao scored substantial gains through his hard work in the fight against severe acute respiratory syndrome (SAJ?S), while Jiangs image was seriously damaged. Hu in effect institutionalized ideology in his July 1 speech and promoted inner-Party democracy at the Third Plenum of the Sixteenth Central Committee.