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This qualitative case study explores innovative development in rural Chinese small schools, examining a Fujian Elementary School. Framed by Endogenous Development and Path Dependence theories, it utilizes observations, interviews, and document analysis to understand how the school addresses challenges like declining enrollment and resource scarcity. Findings show rural schools leverage unique advantages—local culture, flexibility, and community ties—to foster endogenous innovation. The case school transitioned from dependency by adopting flexible "teal" management, personalized curricula, mixed-age teaching, and community collaboration, overcoming path constraints. The study concludes empowered rural schools can serve as sustainable models for equitable education and rural revitalization, offering insights for policy reform.