The adoption of the Chinese Administrative Procedure Law in the 1980s against the specific background of economic decentralization and market transition was partly resulted from efforts by the Central Government to meet the institutional need to control local bureaucrats and realize smooth market transition. This characteristic is most prominently reflected in administrative litigation cases involving the violation of the managerial autonomy of enterprises. A microscopic examination of relevant judicial policies and judicial precedents shows that administrative litigation plays a role in rectifying the practice of interfering in the business operation of collective and private enterprises by grassroots governments. Although evidences show that, compared with other institutional factors, administrative litigation has not played a dominant role in the transformation of property right, the judicial practice of administrative litigation has to a certain extent embodied the will of the Central Government to rely on administrative litigation to restrain “incorporated” local governments and promote the transformation of relation property right and mixed property right into modern property right at the local level.