Abstract: Xiaogang Village has always been regarded as a symbol of China’s market economic system from the collapse of the planned economic system to the liberation of individual rights. In fact, in the past ten years, Xiaogang Village has not had the courage to reform. Under the name of developing and strengthening the collective ownership economy, it has tried to integrate itself into the existing ex-gratia policy rent hierarchy system, and has consciously turned its creativity into existing ones. The “political show window” of the governance system has shaped itself into a privileged village to extract political rent. As a privileged village, the system gives Xiaogang Village special resources. At the same time, in order to gain the favor of the system, Xiaogang Village has been actively reshaped by the system. This phenomenon of privileged villages, although special, is not uncommon in reality, but it is rarely studied. The preferential privilege is theft. This privileged village is contrary to the spirit of reform of individual self-responsibility and self-development. It is also contrary to the value orientation of social aspects such as freedom, equality, justice and rule of law in the core values of socialism. The preferential privileges and the market economy are intrinsically conflicting. The special resources of the privileged villages are obtained at the expense of the people in the ordinary villages. The right way for the Xiaogang-type villages is to normalization, deprivation of the privileges, return to the original intention, and return to the state of ordinary villages which are self-responsibility and self-development. This is also our reflection today on Xiaogang Village’s opening of the door of reform and opening up and the “privileged villages” of Xiaogang Village’s departure from the spirit of reform in the past decade, and reflecting on prerogative policy rent hierarchical system in the counter-marketization of China’s economic reform.