ABSTRACT: China has benefited tremendously from replying on the relation-based way of doing business and governance, as evidenced in its rapid economic growth up to now. However, further relying on the relation-based governance may eventually hinder China's economic growth and exacerbate inequality, resulting in political instability. On the other hand, given China's cultural heritage and powerful vested interest groups, can China shed its relation-based way? In this article, I argue from logical, theoretical, and empirical perspectives the inevitability and difficulty of China's transition from relations to rules, and discuss the implications of the transition or the lack of it for China.