Abstract: Huaxi Village is regarded as the model of neo-socialist rural construction for the remarkable performance of its collective economy. In essence, the so-called Huaxi Village collectivism is centralization plus market: the quasi centralized planning system is executed within the village, while it trades with external markets through its large scale factories, and realizes rural industrialization in doing so. However, its three-legged strategy of “economical dependency, thought control and political monopoly” will inevitably lead to social stratification within the village. The miracle of Huaxi Village may be due to the combination of planning, marketization and industrialization. The rationale of Huaxi’s collectivism is that it enables villagers to achieve common prosperity out of extreme poverty by sacrificing individual freedom for materialistic gains. However, with economic development, members of Huaxi Village begin to pursue diversity, and the constraints on individual freedom by the collectivistic economic system will be increasingly incompatible.