Abstract: Dual employment based on informal employment such as labor dispatch and labor subcontract has become common employment in state-owned construction enterprises. Previous studies have shown the emergence, development and practice of dual employment in state-owned construction enterprises, however, the discussion on its production and reproduction mechanism is still insufficient. Based on the case study of S Group Company, a state-owned construction enterprise, it is found that after the reform and opening up, with the reform of systems of the industrial production management and the labor employment, the construction industry and the state-owned construction enterprises have successively constructed boundaries by making different workers and demarcated boundaries by making use of differences between urban and rural citizenship, thus forming a dual employment system. After that, the boundaries of dual employment were maintained through the labor management practice of identity segregation in the workplace. And then, the identity differentiation and identity reproduction between staff and laborers based on working experience and social status differentiation ensure the reproduction of the dual employment system in state-owned construction enterprises. In a word, the production and reproduction of dual employment in state-owned construction enterprises are the result of the interweaving of the state, the capital and employees. But in the process, the state, but not capital, dominates.