The article examines the relationship among state building, political transition and 'demographic governance', which refers to the identification, categorization and management of a population/household registration system. By comparing the similarity and differences of the development of household registration system in Taiwan and China after early twentieth century, it is illustrated that the divergence of demographic governance resulted from the early stage of modern state building. The Japanese colonial government in Taiwan from 1895 and the communist regime from 1949 established and sustained household registration systems by the police departments. Both the states in Taiwan and China developed unequal categorized system for the elites' political and economic purposes. From the 1980s, however, the democratic transition in Taiwan changed the household registration system from an unequal categorized and policed system to a registration system with more individualized characteristics and more universalized citizenship. In contrast, without democratic transition, the Chinese household registration system still is run by the public security department with the 'agricultural' and 'non-agricultural' divide. The historical comparative study shows the dynamics and decline of management and categorization of demographic governance in modern Chinese societies.