How have the economic reforms in the post-Mao era led to the spectacular rise of a new group of managerial elites? Who exactly are the elite and can the Communist Party handle them? China is a country in the midst of rapid economic change, especially in its traditional rural areas. Despite the public ownership of township-village enterprises, managers, many of whom first gained their industrial experience in commune-brigade enterprises in the collective era, are highly motivated. Their entrepreneurial skills and expertise are indispensable for the vitality and success of rural enterprises while their ascendancy in the local community is reinforced by the growing scale and sophistication of production necessary in the further progress of rural industrialization. Ray Yep presents close up persuasive evidence which suggests that, contrary to the ideas of civil society theorists, managers owe their rise to their growing indispensability, and not to direct confrontation with the state. Collaboration and negotiation is the managers' dominant strategy in pursuing their interests, and this symbiotic state-manager relationship is evident in the processes of political co-optation defending autonomy in enterprise operation, and ownership reform of rural enterprise. The in-depth and sophisticated approach of this study suggests that in the post-Mao era rural industrialization depends upon continuity with, as well as departure from, the past in order to develop the state-manager relationship.