This paper tries to move beyond the tradition-modernity dichotomy rooted in current ethnic education policy via a case study of one ethnic Dong village in China. The main argument is that education policy in general brings about results that cannot be fully presented in the human capital or statist approach. These approaches reduce the level of analysis to the individual in theory as well as in practice and may damage the popular trust in the government's enrollment campaign. Inappropriate incentives can cause misallocation of already scarce resources. Finally, ethnic education that is ignorant of local responses may be detrimental to both modernization and civic education. Ethnicity, or some form of imagined ethnicity, is not necessarily incompatible with the institution of schooling. To the state, the low enrollment problem in Dong areas is the result of poverty and backward culture. The meaning of schooling should be open to interpretation by local ethnic communities, who should be given ample room to put their ideas into practice.