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In this analysis of one of the most spectacular 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 result, the corporatism practiced by local officials has become effective enough to challenge the centrality of the national state. The study also makes a contribution to conceptualizations of corporatism in political theory.