While institutions are said to be poor in China in cross-country comparison, recent research indicates that at the provincial level, institutional quality plays in fact an important role for the economic success of a province, municipality, or autonomous region in China. Our paper aims to add further arguments to this discussion by focusing on the concept of club convergence. In particular, we analyze whether institutional quality in low-income provincial-level administrative divisions converges to the level experienced by relatively highly developed ones, or whether there exist multiple institutional clubs over the period 1997–2007, by using the log t test proposed by Phillips and Sul (2007). Our findings indicate that there exist multiple institutional clubs within China: three rather small clubs which follow an above-average high institutional quality path, and two clubs which find themselves on a relatively low institutional quality path and which together account for the majority of provinces and autonomous regions. Using the same methodology, we find that various members of the poor institutional clubs are additionally caught in a low-income trap.