Before 1950 the basic units of social stratification and social mobility were families: most families contained five or six people. In socioeconomic terms, late traditional China was composed of a large number of small enterprises, perhaps as many as 100 million farms and small businesses. Each was operated by a family, which acted not only as a household but also as a commercial enterprise. The family head also was the trustee of the estate and manager of the family business. Families could own property, such as land or shops, and pass it on to the next generation. The farmers supported a small number of specialized craftsmen and traders and also an even smaller number of land- and office- holding elite families who ran the society. In all cases, the long-term goal of the head of the family was to ensure the survival and prosperity of the family and to pass the estate along to the next generation. The most common family strategy was to diversify the family's economic activities.

China's post-1950 leaders devoted energy and attention to changing some aspects of traditional society, such as rural land tenure and the content of education, while leaving other aspects, such as family structure, largely untouched. Under the commune system the household remained the basic unit of consumption, and some differences in standards of living remained, although they were not as marked as they had been before land reform. Decollectivization in the early 1980s resulted in the revival of rural marketing, and a limited relaxation of controls on outmigration opened villages and diminished the social boundaries around them. The social world of peasants expanded, and the larger marketing community took on more significance as that of the village proper was diminished. Village membership, once the single most important determinant of an individual's circumstances, became only one of a number of significant factors, which also included occupation, personal connections, and managerial talent.

Rural society was more open and diverse than in the 1960s and 1970s, and the rigid collective units of that period, which had reflected the state's overwhelming concern for security, were replaced by networks and clusters of smaller units. The new, looser structure demonstrated the priority placed on efficiency and economic growth. Such strategies lay behind the large number of small-scale enterprises that characterized Chinese society before 1950.

Market activity played a central role in the rural economy of the 1980s. Farmers sold a growing share of their produce in rural or urban free markets and purchased many of the inputs that had formerly been supplied by the team or brigade. A prominent new institution that thrived in the market environment was the "specialized household." Specialized households operated in the classic pattern of the entrepreneur, buying or renting equipment to produce a good or service that was in short supply locally. Some of the most common specialties were trucking, chicken raising, pig raising, and technical agricultural services, such as irrigation and pest control. Many of the specialized households became quite wealthy relative to the average farmer. The new economic climate and the relaxation of restrictions on the movements of rural residents gave rise to numerous opportunities for profit-making ventures in the countryside. Towns, villages, and groups of households referred to as "rural economic unions" established small factories, processing operations, construction teams, catering services, and other kinds of nonagricultural concerns. The growth of these nonagricultural enterprises in the countryside created a large number of new jobs, making it possible for many workers who were no longer needed in agriculture to "leave the land but stay in the country," significantly changing the structure of the rural economy. In 1986 nonagricultural enterprises in the countryside employed 21 percent of the rural labor force.3

The discrepancy between farm and non-farm wage rates is an important attraction of labour migration, although it is not the only factor affecting migration decision. Off-farm employment in the cities is likely to offer higher earnings than farming, especially in the remote and poor rural areas.

According to the 2010 census, the rural population has declined from 82 percent in 1970 to 74 percent in 1990 to 64 percent in 2001 to 56 percent in 2007 and is expected to drop below 40 percent by 2030. Land essentially belongs to local government, a holdover from the commune era. There are around 800 million rural peasants and migrant workers, roughly 500 million farmers and 300 million to 400 million excess unskilled rural laborers.4 There is a wide gap between the wealth of the impoverished countryside and the booming cities, with the income of rural residents less than a third of that of urban residents. Nevertheless the rural China has experienced an tremendous decline in poverty over the last twenty years and the rural poor who resided in less remote and less hilly areas in the coastal and central regions, were better able to participate in the rapid agricultural growth of the reform period. The remainder of the rural poor have remained trapped in more remote upland areas, particularly in western provinces, where agricultural productivity gains have proven far more problematic. A numbers of observers have concluded that China's poverty problem mainly occurs in poor mountain regions, and China's poverty reduction programs have long focused on mountain areas.