In this paper, the author constructs a dynamic model, as an analytic basis, about development of traditional institutions in Chinese history. The model, which contains three understanding concepts of “centralization of despotism,” “economic powers of aristocracy/bureaucracy” and “market management,” was brought up in the studies in China’s institutional history. Summarily, in history, any, and only two of the three constructional elements could make up an institutional combination simultaneously, and from this to that combination they could produce some very different political and economic effects. The difference was visible especially if that they were put under the polar spectrum of state/market. In addition, property rights of the individual are considered the most important ingredient of institutions in this framework. Therefore, we could clearly discriminate the variation of characteristics in the traditional Chinese institutions from the ebbs and flows of property rights in this spectrum. This model constantly appears a character of “combine-two-leave-one” in institutional evolution because of their simultaneous repellence and accommodation from each other. That is, the two from three elements only could achieve “equilibrium” in the course of institutional development. The history of institutions in traditional China accomplished was a very process that this equilibrium went to that equilibrium in alterations unceasingly. Basing on this model, we could deduce lots of worthy analytical theses on institutional history.