Abstract: The relationship between the state and the workingclass has undergone three changes during the industrial restructuring of the stateowned enterprises(SOEs). First, the state is giving up its direct control over society with corporatism, transiting from being quasitotalitarian to fragmented authoritarian. Second, the workingclass, while breaking away from “the total institution”, is losing its status as the leading class protected by both the state and danwei (work unit). Third, the axis direction of the relationship between the state and the workingclass is shifting from being the primary factor in danwei to a logic based on capital. These three changes have been taking place in two processes: the pushing process of the SOEs toward an overall marketization and the withdrawing process of the SOEs from social responsibilities. All that, combined with the economic development, is the most striking feature of Chinese Authoritarianism, markedly different from any other powerful country. At the same time, economic development itself serves as a basis to extend Authoritarianism with legitimacy. The authoritarianism in China is currently in a fragmented state. The statecapitalworking class structure formed in such a context has a big problem of labor being severely exploited by capital. What we need to do is step up the legal system construction in the course of the capitalization of the SOEs, protect workers’ rights as citizens by strengthening organizational construction to fight for their industrial citizenship when SOEs are retreating completely from the social responsibility. At present when the state and capital are in coalition, the function of the legal system in protecting workers’ rights and helping workers forming their organizations for their rights is usually limited in many areas. The extent to which workers’ general rights as citizens can be protected and how much of their industrial citizenship rights can be obtained depend on the stance of the state. Only when the state maintains some distance from the working mass as well as from capital can workers’ rights be protected.