Veterans have become one of China’s largest and most vocal protest groups. Studies on the country’s veterans have focused on their grievances and have identified these individuals as “unlucky” victims of economic reforms who suffer because of the state’s inadequate attention and local governments’ poor policy implementation. However, this article argues that the difficulties veterans face are the product of piecemeal policies adopted by central authorities. These policies have been inherited from the Maoist era’s principle of local resettlement of demobilized soldiers. Local governments have tried to reduce the heavy burden this resettlement policy imposes on them. Drawing on a review of a large number of policy documents, as well as interviews with dozens of veterans, this article presents a comprehensive picture of the resettlement system and the way piecemeal reforms have spurred various forms of unrest among veterans. It also shows that the differential treatment of various veteran groups in similar situations, as a result of the fragmented system and accumulated policy changes, has exacerbated veterans’ grievances. Finally, the article explores the conundrum of reforming the resettlement system. While the local resettlement of veterans is guaranteed and remains a cornerstone of civil/party-military relations, it has become impossible for the government to locally resettle all veterans. The resettlement system’s internal fragmentation also allows different authorities to shirk responsibility and eventually puts the burden on the veterans themselves. The elusive reforms proposed by the current leadership are unlikely to resolve these tensions.