Although the "Neighborhood Unit" in China is originated from planned economy, it is almost the same as the concept of Neighborhood Unit in other countries which is based on the industrialization and urbanization and will not change along with the politic and economic systems. With the economic system reform and the market development in China the development pattern of housing changed thoroughly, there are many doubts about Neighborhood Unit theory and related technical standards. This paper tries to explain that the Neighborhood Unit does not fail even in market economy by tracing back to the origination of the theory in China, the relationship between Chinese neighborhood unit and Neighborhood Unit of C. Perry, and practices both in China and other countries. Then recommendation is given on how to implement the basic theories under market-oriented economy.