There is no gainsaying that economic reform in post—Mao China is a distinct phenomenon that continues to challenge the existing knowledge of social sciences. Among various parts，the role of the township-village enterprises（TVEs）is perhaps the most peculiar. The TVEs are small and medium-sized non—state enterprises in rural areas engaging in predominantly industrial activities. They are important to the students of China’s economic reform for three reasons. First of all，the rapid expansion of TVEs was the engine of China’s incredible economic growth in the 1980s and the export boom in the 1990s.1176906 In turn，rapid growth provided a relatively stable social environment for economic restructuring during the economic reform. Secondly，the dynamism of this non state sector distinguishes the Chinese experience from its Eastern European counterpart（Qian and Xu 1993）. This economic dynamism saved China from the transformational recession that was observed in Eastern Europe. Kornai argued that the uncertainty triggered by the structural reform seriously weakened the propensity to invest，thus leading to supply collapse and economic recession（Kornai 1994）. But in China，rural population accounts for more than 70% of the total，and the opportunity cost of investment was low for rural peasants.1176907 Therefore，the dampening effect of uncertainty on the propensity to invest was much smaller. As a result，the economic dynamism released among the rural TVES sustained China’s economic reform through the peril of supply collapse and economic recession. It strengthened the effort of the Chinese government to control inflation，and to transform the economic structure from sellers’market to buyers’ market. Thirdly，the weak legacy of state ownership in rural areas seemed to make it easier for rural TVEs to learn the new rules of market economy and to adapt to the new economic environment. While managers and workers in urban state enterprises were dragged by the organizational routines and culture gradually emerged during thirty years of state ownership，rural people were relatively unencumbered by this legacy，and more flexible and adaptive to the economic transition（Zhang 1990；Liang 1992）.

The TVEs entered the economy on a massive scale since 1979 （McMillan and Naughton 1992；Naughton 1994a，1994b，1995）. The existing literature about their rapid expansion offers basically two explanations. The first refers to the role of local governments.1176908 Because of de jure and de facto ownership，township and village governments have incentive to help TVEs develop. 1176909 They provide capital，land，workers，managers，and direct administrative support like licensing and granting tax holidays（Oi 1992，1995；Wong 1988；Naughton 1994a）. When the activities of TVEs were criticized by the conservatives within the Communist Party，the local governments even provided administrative protection（Liu 1992；Parris 1992；Zhou 1996）. The second refers to the role of local communities. 1176910 The pooling of resources during the initial phase of production and the restraint from redistributive conflict，especially during the difficult period of business（Zhou and Hu 1994：237～90，esp 272；Song and Du 1990；Wu 1990），requires intricate coordination among owners，managers and workers. Weitzman and Xu（1994）suggested that mutual trust among people may help them overcome the fear of opportunism and avoid suboptimal outcomes due to misunderstanding. Perhaps，the multistrandedness of social relationship and the close interaction also make the surveillance of opportunistic behavior highly effective.1176911

Both explanations support the general claim about the nature of economic reform in China as reform from below. Instead of preoccupying with the role of central government as many students of China’s economic reform did in the 1980s，1176912 they correctly shift our attention to the role of local initiative in the reform process. However，both explanations imply that the rapid expansion of TVEs was a result of endogenous force. The exploration of exogenous explanation has been limited.1176913 I argue that this is a serious weakness in the existing literature urgently awaiting effort to overcome.

The importance of exogenous explanation is particularly clear when attention is turned to the issue about access to intangible resources like technical know—how and extralocal marketing information. Previous studies of the rapid expansion of TVEs focused predominantly on tangible resources like capital，labor and land. A typical example was the papers edited by Byrd and Lin. Here，the analytical framework was constructed on the basis of the conventional production function in which industrial output was understood as a function of production factors（Byrd and Lin 1990）. As a matter of fact，this approach is commonly found in the present literature on TVEs.Naughton argued that TVEs could enter massively into the economy because local governments helped them get land，labor and capital that they could not buy in market（Naughton 1994a）. In his study of Jiangsu，Ho agreed that the massive infusion of labor and capital into the rural non-agricultural sector went a long way towards explaining the rapid growth of rural non-agricultural output（Ho 1994）. 1176914Few have studied the issue of access to intangible resources like technical know-how and extralocal marketing information.

However，solving the problem of access to technical know-how and extralocal marketing information is necessary to explaining the rapid growth of TVEs. It is through technical know-how and extralocal marketing information that capital，labor and land can be turned into revenues and profits. Without these two kinds of inputs，the rapid expansion of TVEs would not be possible. Of course，TVEs need more than technical know-how and extralocal marketing information in order to survive and expand in the post-Mao Chinese economy. But no explanation of their rapid growth is satisfactory if the issue about access of technical know-how and extralocal marketing information is not dealt with in an up-front manner.