Shen’s paper examines the respective roles of central and local government officials, institutions in affecting the establishment, design, and implementation of the new development zones. It tackles the issues from a political economy perspective by focusing on the intergovernmental relations at the subnational level and employs the Special Economic Zone policy as an example and studies its implementation in three case study areas in China, including Tianjin, Guangzhou Development Zone, and Nasha District in Guangzhou. It develops the concept of negotiating governance and concludes that the different intergovernmental negotiation relationships have led to different outcomes of subnational development. It contributes to the recent developments in geographic theory regarding the social and political construction of geographic scale and the dynamics of central-local governmental relations.