The township and village-owned enterprises（TVE）in rural China have been regarded as both an engine of the Chinese economy and an important contributor to the success of Chinese economic reform. They were established by the township and village authorities in the 1980s to achieve three ma in purposes：to provide government revenue，to increase rural residents’income，and to create employment opportunities for the tremendous rural surplus labor force. The extent of the achievements of these three aims was conven tionally used to measure the performance of TVE.TVE pursued simultaneously maximum profit and business viability.