Much of the literature on China's successful adaptation to the policy challenges posed by economic development credits two principle approaches, gradualism and local experimentation. However, the extent to which these approaches aid policy adaptation to environmental policy challenges is less well-explored. This article examines how these approaches have shaped policy adaptation in water resources management by presenting data on ambitious water policy reforms that are, to our knowledge, new to the English-language scholarly literature. While gradualism and local experimentation have aided in the adoption of economic mechanisms like water pricing reform and water rights trading to regulate water use, institutional reforms have been undermined by an over-reliance on central control and direction. This phenomenon, which we call hierarchy, constrains China's ability to address diffuse, inter-jurisdictional and multi-sectoral water management challenges like nonpoint source pollution, and may inhibit its ability to address similarly complex sustainable development challenges into the future.