China's three-tier administrative reform becomes very urgent due to the rapid expansion of local government debts, financial system reform and urbanization. ANBOUND research team points out that the three-tier administrative reform is not so simple. The main obstacles are the declining authority of prefecture-level cities and the immature condition of village-level self-governance. Therefore, the three-tier administrative reform should be directed at supporting the county and town level development besides imposing restriction on the development of prefecture-level cities.