The article discusses how political change in China can be understood through an institutional paradigm. This paradigm focuses on the relationship between the situation, system, and performance of institutions in China. Unlike traditional views, the article argues that institutional change in China involves not just rearranging institutions, but also changing the overall institutional situation. The study shows that the institutional situation influences the institutional system, which then affects institutional performance. The analysis highlights the complex interplay between politics and the economy in China, emphasizing the importance of institutional competition for state power.