Abstract: Contemporary China’s urbanization has evolved along two lines: the growth of cities following urban economic development and population concentration, and rural urbanization based on the growth of towns in rural areas. The latter,conceptualized as “urbanization form below” has been propelled by the rise of rural enterprises, resulting in rapid rural employment transformation and the growth of towns. Rural urbanization since the reforms has developed rapidly. In 1995, the share of the designated towns’ nonagricultural population accounted for 9 5% of the nation’s total population, an increase of 5 3 percentage points over that of 1978. This nonagricultural population was 12 5% of the total rural population which was 7 5 percentage points higher than 1978. It constituted 42 5% of the total nonagricultural population of all cities and towns for the nation, rapidly catching up with the share of urbanization contributed by cities. Urbanization from below has been driven by the activities of rural governments and peasants. Three stages of development can be recognized. After the initial period of growth during 1978～1983, it experienced rapid take off during 1984～1988. It entered a period of expansion since 1990. However, the level of rural urbanization has lagged far behind the level of rural nonagriculturalization as well as the nation’s urbanization level in general. As rural enterprises will remain the mainstay of the China’s rural economy for a long period of time, they will continue to cause rural labor transformation and rural urbanization. But with increasing economic liberalization in urban economy and industries moving out the cities, the fact meaning of “urbanization from below” will have to be broadened to include all domestic and overseas forces affecting town growth that are non state in nature.

Key words: urbanization from below, small towns, rural enterprises, China