The main question of this paper is: what factors have caused the transformation of state-capital relationship in Taiwan's recent political transition? This paper uses three factors in accounting for this transformation: the state, the capitalist, and the popular movement. The main argument is: while the popular movement has caused Taiwan's recent political transition, it has also been responsible for the rise of a neo-authoritarian regime that transforms the state-capital relationship from a patrimonial to a senior-junior type of alliance. However, though this transformation has allowed the capitalists to have more influence on the state, the KMT state still has kept its autonomy in major decision-making processes.