How do China's ethnic politics and border concerns drive distributional outcomes? While many of China's 14 neighbors are widely considered unstable regimes, systematic studies of political risk diffusion have been surprisingly sparse. China's ethnic minorities, many of whom straddle borders with neighboring countries, have also been largely ignored in studies of fiscal distribution. I bridge this gap by focusing on China's transborder ethnic minorities (TEMs) - co-ethnic groups with external kin across the border. Using rare comprehensive center-to-local budget data from 1995 to 2003, I argue TEMs can easily create "porous borders" when neighbors experience political risk, spurring the Chinese leadership to give grants to prevent ethnic unrest. I also draw on 14 months of fieldwork to present in-depth case studies of the North Korea-China border are
