Emerging studies on university stratification have often attributed the developmental gaps between universities to the popularization of new public management in contexts where market mechanisms prevail in higher education governance. However, less attention has been paid to how state powers continue to mediate university stratification alongside market influence. Embracing the competitive emphasis of new public management, the Chinese state has launched a new world-class university scheme, the Double World-class (DWC) Project, replacing the past one, Project 985/211. Tracing the continuities and changes from Project 985/211 to the DWC Project, this study examines the mechanisms and outcomes of China's university stratification at two levels. Firstly, the DWC Project has reproduced and reinforced the overall stratified landscape of China's universities. The state-designated hierarchy of elite and non-elite universities is reproduced in a more complex form of market-based stratification through what we propose as a "lock-in cycle" mechanism. Secondly, the DWC Project is nonetheless reshuffling the internal stratification of elite universities in three aspects: privileged identities are becoming volatile, which catalyzes inter-university competition financed by local governments; the distinction between central and local universities is collapsing when stratification becomes increasingly discipline-based; and the rising market-based stratification is challenging the state-designated hierarchy and the lock-in cycle.