The development of markets and the penetration of capital into agriculture have started the agrarian transition in rural China, which is transforming smallholding, household-based agriculture into various forms of capitalistic production. This again raises in a new historical and social context the long-debated question in the agrarian transition literature: Can family farms survive the onslaught of capitalist agriculture based on wage labor and what shapes the confrontation between family farms and agro-capital? I argue that it is the local political economy—rather than some natural obstacles in agriculture to the penetration of capitalism—that shapes this confrontation and gives rise to a variety of local patterns in how family producers interact with agro-capital. Conceptually, the primary dimension in which local patterns diverge is how direct producers’ transactions with the product market are mediated. Based on this distinction, I identify three distinct local paths of agrarian transition—agribusiness-led corporate production, independent household production, and cooperative production. I use data collected from fieldwork and secondary sources to show how, in each model, characteristics of the local pattern are shaped by the local political economy.