Abstract: An issue of growing salience in Chinese politics is the widening income disparities between the more prosperous coastal region and the interior regions. This article provides a preliminary assessment of a government initiative to promote interior development through rural enterprises. It first discusses the factors that led central leaders to consider disparities in regional rural enterprise development as the crux of rising regional inequalities and thus the rationale for a regional policy centered on rural enterprises. Next, the key policy components, including credit availability, tax incentives, and an effort to induce interregional cooperation, are presented. Local government responses are described and analyzed, as is the East-West Rural Enterprise Cooperation Project. The conclusion is that while the rural enterprise initiative has been a worthwhile effort, it will probably have only limited impact on the reduction of regional disparities.