This paper examines the micro-politics and interactions between the state and grassroots actors in the context of urban village redevelopment in Jiaxiaoying Village, Hefei, China. The study explores the complex dynamics and conflicting interests among homeowners, tenants, and the elder generation during the demolition and relocation (Chaiqian) process. Through ethnographic fieldwork and interviews, the article reveals how the state's top-down urban renewal agenda is translated and negotiated at the grassroots level, leading to divided interests and unequal power relations. The paper argues that the state employs an agent model of governance, relying on neighborhood committees and clan networks to penetrate and control the grassroots society. The case study sheds light on the scalar politics and the encounter between state power and local resistance in China's urban transformation, contributing to the understanding of state-led spatial production and urban governance in the Global South.