The dichotomous nature of Chinese rural industry is explored. The central fiscal policy change of the reform era that has given rise to the general township-and-village enterprise form remote from major metropolitan areas, is clarified. The traditional socialist form of state-owned enterprises of the rural areas surrounding large cities is described and the capital constraints upon both sub-categories that have prompted stock capitalization and employee ownership are analyzed. The diversity of ownership and management systems that have developed among both township-and-village enterprises and stateowned enterprises is discussed. China's grass-roots, experimental, "inductive" approach to enterprise reform is contrasted with Russia's top-to-bottom, "deductive" approach. The indigenous and gradualist character of Chinese reform is compared to the externally influenced and "big bang" character of Russian reform.