Abstract
This paper examines the institutional transformations, particularly in the aspects of inequality and stratification mechanisms, in the course of Chinese reforms over the past two decades. It examines the increasingly inegual income distribution in China that has occured since reforms started in 1978. The increase in China's Gini coefficient has been much larger than that of Taiwan. The stratification mechanisms in China are institutionalized through market institution and bureaucratic coordination, with human capital and political capital providing access to opportunities. The dual upward ladder sees both official corruption and open competition in the market. As the workplace system retreats in urban areas and command authorities fade out in the countryside, China is facing challenges to rebuild a stable state-society relationship and to moving toward further institutional transformation.