This paper draws on theories of network governance to analyse a case study of policy implementation aimed at reforming Chinese public education. It builds on the work of Rod Rhodes (1997), who conceptualises 'network governance' in terms of interactions between groups that make up networks involved in policy making. Public school reform in China has included the establishment of the Modern Enterprise System, which disconnected schooling functions previously associated with State-owned Enterprises to rectify the loss of profit. The State Commission for Restructuring the Economy proposed that these schools should be relocated from enterprises to the Ministry of Education in order to rectify loss of profit in State-owned Enterprises. This paper reports on a case study of the railway state-owned enterprise schools in Harbin, the capital and largest city of Heilongjiang Province in Northeast China. The study examines how the top-down policy is implemented from central government to ministry level, to province level, to municipal city level and finally to the district level. It also shows the way networks support negotiation and bargaining at the district level, which influences the education policy of the central government. These intersecting policy implementation processes show how the centralised Modern Enterprise System policy proposal is coordinated through actions and resource transactions between actors at different levels of government and schools. This paper argues that the processes of formulating and implementing Chinese education policy can be characterised as a form of network governance, which coordinates actors, decision making processes, and stakeholders' motivation to comply with collective decisions in Chinese education. The paper reveals network governance to be an effective and legitimate way of problem-solving that assists policy implementation and education reform in China.