In this incisive analysis of one of the most spectacular economic breakthroughs in the Deng era, Jean C. Oi shows how and why Chinese rural-based industry has become the fastest growing economic sector not just in China but in the world. Oi argues that decollectivization and fiscal decentralization provided party officials of the localities-counties, townships, and villages-with the incentives to act as entrepreneurs and to promote rural industrialization in many areas of the Chinese countryside. As a result, the corporatism practiced by local officials has become effective enough to challenge the centrality of the national state.