This article examines institutional transformation during themarketization in Mainland China. During this period, the "centralplanning" economy system is gradually transformed toward a "socialist market" economy system. Social structure has becomedifferentiated, and social classification has become blurred. Theoriginal operational mechanism of the Chinese society also haschanged. These social changes may lead Mainland China to facesevere social crisis. Detailed analysis reveals that the party-stateand state-society authority system, are deeply involved. The PRCgovernment failed to solve problems by expanding personal politicalparticipation, enhancing power counterbalance, and taking othercircumstance-guided approaches, but to use both tough and gentleblocking actions. Such movements have already accumulated energyof potential instability inside Mainland China. Whether politicalinstitutions of Mainland China would reform in accordance withsocial development in the future deserves our close attention.