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Much research has tended to neglect the study of the impact of public policy on the development of rural enterprises. However, public policy has been extremely important in China since it has determined not only the extent to which rural enterprises have been developed, but also whether rural enterprises should be allowed to be developed at all. Therefore, an analysis of changes of public policy since 1978 must be a crucial component of any analysis of the development of rural enterprises. This study focuses on policy changes towards the development of rural enterprises from 1978 to 1992. The policies towards the development of rural enterprises, especially private enterprises, had fiercely been debated during this period. Such debate had not been cooled down until Deng Xiaoping paid a visit to south China in early 1992, and called for bolder reforms.