This chapter first identifies the positive relationship between industrialization in the form of the development of township and village enterprises (TVEs) and the unique ‘localized urbanization’ in coastal provinces in China. The research findings indicate that, where there has been successful development of TVEs, the extent of urbanization of rural townships and counties has been far greater than in those rural regions where TVEs have remained largely underdeveloped. After a substantial review of the literature in the area, this chapter attempts to identify institutional factors that have put a brake on agricultural involution and underpinned industrial evolution in coastal provinces in China.