The development of small cities and towns has always been a big issue in China's reforms. Since 1997 the reform on the household registration system of China's small cities and towns has made progress at a good pace, which plays a positive role in the urbanization of rural population. However, farmers do not have great enthusiasms for applying for their residence permit in towns as it is expected. On the whole, the restrictions on residence registration in towns are relaxed with its appeal gradually becoming weak. The current urbanization of Chinese rural population has entered into a new developmental stage in which relevant systems that come in a complete package must be reformed. In such a new situation it is necessary for us to reconsider the big issue of small cities and towns in the perspective of scientific development, thus bringing them into full play in our overall planning of urban and rural developments.