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Social scientists have been puzzled by the fact that the rapid economic growth in China in the 1980s and early 1990s originated in rural areas, even though the economic institutions and policies in the Chinese countryside were gravely inadequate for such a substantive change. This paper argues (1) that this rapid rural economic growth of the 1980s and early 1990s can be understood as an “industrious revolution”; (2) that state-sponsored social leveling was a pre-requisite to the take-off of this industrious revolution; and (3) that the “industrious revolution” of the 1980s and early 1990s shares important commonalities with the period of rapid rural economic growth in the 18th century. “Industrious revolution” is defined as a process in which the economy expands through market competition among a large number of competitive, small producers. Social leveling is a set of state policies and practices that the state constrains the power of wealthy elites including large capital, while at the same time protecting and supporting small producers. Using archival research, ethnographic observation in villages and interviews with peasants and government officials, along with drawing on secondary sources, this paper examines how the Chinese state actively sought to shape class relations, and created market conditions for rural economic expansion both in recent decades and in the 18th century. By identifying a specific economic dynamic—industrious revolution—my research challenges the popular view that conceives of the adoption of Western capitalism as the primary thrust behind the “Rise of China.”