Although China’s rural industries have sustained an extraordinary performance for almost two decades, their success remains to be understood. This is particularly so with regard to the financing of rural industries. In studies that explicitly or implicitly touch on the issue of financial management in the rural industrial sector, two main approaches can be identified. One can be referred to as the ‘hard budget constraint’ approach, which emphasises the fundamental change in budget constraint on the rural industrial sector and the implications of this change for the phenomenal performance of rural industries; the other is the ‘local state corporatism’ approach, which underlines the developmental role of local governments in promoting rural industrial growth.