Abstract: During the 80’s and 90’s in the 20th century, Township and Village Enterprises (TVEs) were the strongest force leading to China’s economic growth. The enterprises were unique in the sense of the structure of property rights. Some economists pointed out the “ambiguous” structure in TVEs because their property right or ownership belonged to village collectives or township governments but their operation was delegated to TVE managers. Based on the new classic economic theory, this kind of property structure is inefficient due to the separation of the inputs and returns. The success of TVEs thus has stirred up hot debates on the economic growth of “China Pattern,” with the key question being why an ambiguous property structure could have been so successful.There have been three categories of academic explanations. The first one is based on “industrial structural characteristics,” which argues that the success of TVEs was due to the differences between the “light” and “heavy” industries. There was a shortage of “light industry” products in contrast to the “heavy industry” products. TVEs took the market opportunities to make consumer products and reaped high returns with little competition. The second explanation focuses on the behaviors of local governments. The new fiscal contract system provided local governments with strong incentives to develop local TVEs. The third is a “historical explanation,” that is, the success of TVEs could be explained by the “path dependent” theory. In 1994, Martin Weitzman and Xu Chenggang proposed a new “cultural explanation” in their paper that the Chinese “corporate” culture could be regarded as an important factor that had positively affected the management of TVEs. In the current paper, I try to continue Weitzman and Xu’s arguments and respond to Qu Jingdong’s views in his paper of “Possession, Operation and Governance as Three Conceptual Dimensions of Town and Township Enterprises.” I believe that the nature of village culture was an important part of TVE operation, which could help us understand the success of Chinese TVEs.

Key words: township and village enterprises , property rights , China Patter