This article explores the changing dynamics between grassroots merchant communities and the local state in the development, expansion, and regulation of a local marketplace over the past four decades. It provides an account of how an informal market town has transitioned into an urban hub for the domestic consumption of small commodities. In the early stages of market reform in China, the local state was neither entrepreneurial nor developmental. The transformation of the wholesale marketplace into the driving force of the local economy was primarily driven by the grassroots merchants' demands. It was only when trading became too prominent to ignore that the local state began to formally manage the market, prompting them to adopt a more active and "entrepreneurial" role. By mapping out this process, I argue that the market is embedded in the social and political arrangements that themselves are evolving through conflicts and confrontations. Market exchanges expand and scale up through a social-movement like bottom-up process before they were handled through institutional entrepreneurs within the state apparatus.