The development of migrant children schools in Beijing in the 1990s is used here to illustrate the changing state-society relationship in China. These schools emerged as an attempt by individuals to resolve an educational problem resulting from the retreat of the state in enforcing its population policy and its reluctance to educate children of the floating population gathered in the capital. These individuals used their own resources, and harnessed support from other sectors in the civil society as well as from some government units. Even though the local education departments did not take up the responsibility to educate children with household registrations outside Beijing, they did not give the migrant children schools recognition or support. This report traces the manoeuvres, negotiations and other strategies used by these schools to survive, by the different government units at different levels to contain them, and by others to support them. This struggle illustrates the growing heterogeneity inside government and the increasing strength of civil society in China.