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House churches in a Northern Jiangsu city are the focus of this study, which examines the transformations of churches in the gray market as they transition from rural churches into urban institutions. The analysis presented here sheds light on the transformations of the church “order,” the state’s management of house churches, and the subsequent state effect. Churches that laid down roots of evangelism in the region are traditional, fundamentalist, and paternalistic, and have been troubled by internal division and decline. As the state increases its control and scrutiny over these churches, religious elites have responded with varying strategies. Some are passive and evasive, while others endeavor to reform church organization, especially the emerging urban churches that are the outgrowths of fundamentalist house churches.