THIS book represents an effort to make the concerns of those engaged in the study of Chinese politics relevant to students of comparative politics, to extend the boundaries of comparative theory, and to shed new light – both empirically and theoretically – on the issue of institutional variation and change in China.

Empirically, the book focuses on the development of China's rural industrial sector since 1949. In theoretical terms, it develops a dynamic approach to the study of institutional variation and change by engaging in theorizing across three levels of analysis. Analysis at the individual level provides careful, empirical grounding for assumptions about individual behavior; analysis at the institutional level examines the ways in which local institutions create incentives for and constraints on individual actions; and finally, analysis at the level of the national political economy focuses on the ways in which changes in the broader environment can transform the incentives and constraints imposed by local institutions.

This approach allows me to explain in a systematic manner not only the striking regional variation in the form of property rights in rural industry during the first decade and a half of China's post-Mao reform, but also the dramatic move toward privatization that has occurred throughout China since the mid-1990s. Moreover, I show that the evolution of property rights and state extractive institutions are integrally related.