Rural industrialization is often seen as a characteristic feature of Chinese socialism, under both Mao and his successors. It is less often recognized that rural industrialization did not start from scratch: the pre-1949 Chinese countryside was already industrialized to a considerable degree, though most rural industries were unmechanized “proto-industries” – small-scale, decentralized, and household-based. Modernizing governments, including both the Kuomintang and CCP regimes, tended to see such industries as obstacles on their march towards industrial modernity, understood as mass production in urban factories. This article focuses on one particular industry, handicraft papermaking in Jiajiang county, Sichuan. It argues that Maoist policies, with their emphasis on local grain self-sufficiency, discriminated against communities that depended on specialized production and exchange. To the extent that these communities had specialized in crafts in order to compensate for an inhospitable natural environment (as was the case in many upland areas), Maoist policies penalized the already disadvantaged – with sometimes disastrous consequences.