Democratic development and rule of law in the authoritarian China is still in a preliminary stage with serious collective incidents increasing drastically during the social transformation. It is hard to solve all the problems through judicial system, administrative way, or even the traditional people's mediation respectively. Therefore, new and diversified conflict resolution mechanisms which can coordinate various parties and deal with different kinds of disputes are strongly needed. Grand mediation (GM) has a special advantage in this respect and it's been highly promoted by the Party-state in Mainland China. Using cases in urban China, it explores GM's role in defusing social unrest and reducing people's hostility towards local government so that it, to a large extent, can enhance the legitimacy of the central government whose paramount goal is to maintain political stability and social harmony.