China’s 2000 strong state-owned farms are experiencing a dual transition in the country’s economic reforms: the market transition (from state-owned enterprises embedded in the redistributive system to independent enterprises in the new market economy) and agrarian transition (from small-scale, household-based agriculture to large-scale, capitalist forms of agriculture that rely on market exchanges of land, labor and products). This paper highlights the results of a comparative analysis of the state farms and rural farming households in the agrarian transition to address the theoretical debate about agrarian transition. Using field research data from state farms in HeilongJIANG Province and drawing extensively from secondary sources in Chinese, this paper examines the he process of agricultural modernization in state farms’ reform experience. This paper argues that the state farms followed a path distinct from that in the rest of rural China.