Abstract: Real estate is characterized by market and societal features. The state's malfunctioned regulation over the real estate originated from the differences in the profitgaining methods by the central government and the local governments， and from an authoritarian market producing powered market forces， thus leading to the halting of the executive function of the central regulative system on the one hand and sabotaging the resistance initiated by societal members on the other hand. Behind this paradox of a “powerful government” with a weak regulative ability is the regional protectionism. The central government should adjust the scope of decentralization： from empowering the internal power distribution within the government system to empowering the people in order to have a new “twofoot” mode of social governance. The coconstitutive relationship between the state and society must be built to resist the erosion of the authoritarian market， which is the fundamental solution to successful production in Chinese society.

Key words: authoritarian market, coconstitution, compelling politicization, alfunctioned regulation