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The Free Teacher Education (FTE) policy is an incentive-based intervention that the Chinese government has been piloting since 2007 to channel quality teachers to underdeveloped rural regions. Drawing on interviews with fourteen teachers from a case program and supplementary data, this study finds that most FTE teachers end up teaching in high-performing urban schools and determines that teachers’ preferences, policy-imposed constraints, and local labor market dynamics contribute to this unintended consequence. I argue the FTE policy needs to reform its incentive schema to include both monetary and non-monetary incentives in order to motivate quality teachers to teach in high-need schools.