The rise of localism has been a defining feature of the post-socialist state. Whether from regime collapse or through the introduction of reforms, as the tentacles of the post-socialist states retreated from intimate involvement in daily socio-economic life, the way has been opened for new groups at the local level to assert ownership and control of material resources and social capital. In some parts of the former USSR, the rise of the local led to violent upheavals. While China was mostly spared this, it has still seen a proliferation of new interest blocs at the local level. The new decision-making freedoms of the reform era have opened up a reservoir of organizational creativity as rural communities search for the tools and mechanisms needed to articulate and defend their interests in the market economy. Increasingly free of Maoist-style conformism and ideological limitations on cultural expression, local communities have gradually begun to mobilize their distinctive social and cultural capital. Evidence of this can be seen in the ways community identities are being rebuilt around clan, lineage and religious affiliations and the effect this has on patterns of community governance. In many parts of China lineage associations have been revived and ancestral halls rebuilt.1 Nowhere is this process of growing community assertiveness more visible than in the recent experiences of many of China's ethnic minorities. These groups have access to unique forms of cultural capital that can be mobilized in the service of community-building and interest formation. The distinctive and creative ways in which ethnic minority peoples have responded to the transformation of rural China highlight the shifting boundaries of local identity and the potential for new bases of authority. Based on a case study of a Hui hamlet in southwest China, where extensive fieldwork was conducted in 2002-3, this paper demonstrates how one such community reinvented itself through Islam. The case study offers insights into the ways in which rural Chinese communities are struggling to rebuild identity, safeguard interests, defend rights and create opportunities for social and economic development. It is a story of cultural inventiveness, ethnic assertiveness, kinship conflicts, rural politics and local-state relations. While the study centres on a Hui Chinese community, it more broadly exemplifies how rural communities are able to assert themselves within the economic, political and cultural space created by the diminished presence of the state. The Balong Hui, Islam and Development Balong is a hamlet of 90 households in the administrative village of Landu in Shangri-la County.2 Landu is an ethnically complex administrative village of fifteen dispersed hamlets (zirancun) variously inhabited by seven distinct ethnic groups: Naxi, Han, Yi, Miao, Bai, Hui and Tibetan. Balong sits between a Yi hamlet above and a Naxi hamlet below. The Hui residents of Balong and of the neighbouring hamlet of Shiba are the only Hui farming communities in the northwest corner of Yunnan.3 Hui was a term given to all people of Muslim descent in China until the Communist takeover, when Muslim groups such as the Uygur and Kazakh were given official ethnic minority status.4 The new government grouped together all other Chinese Muslims and their descendants as the Hui, regardless of whether they actively practised their religion.5 The Hui in Balong are descendants of Muslims from Shaanxi Province and have lived in northwest Yunnan for little more than 100 years. They arrived in Yunnan after fleeing the repression that followed the mid-nineteenth century Muslim rebellions. Only a few handfuls of families made it to the Landu area, where a high altitude, a harsh environment and intermarriage resulted in the adoption of many of the economic and cultural practices of the dominant ethnic groups of the region. Today the hamlet's population is approximately 500. …