||This paper examines the Communist Party's recruitment process and its impact on social inequality in urban China. It makes a conceptual distinction between party sponsorship and political incorporation as two different mechanisms of how the party recruits its members and the source of inequality between members and non-members. Analyses of the data collected in 1996 show that the Party not only selected individuals and subsequently placed them to elite positions, but also actively incorporated those who have achieved elite status into the Party. Economic benefits differ among party members who are recruited from different channels. Compared to non-members, the premium of being a party member is the lowest among those incorporated, and highest among those who are neither sponsored nor incorporated. Understanding the source of party members' advantages requires a close examination of the dynamic relationship between political credential and career trajectories.