Abstract: The rapid development of rural industrialization in China in the past decade or so has promoted significantly the urbanization of rural areas in the country as well as the process of national industrialization. In the surveyed towns 68.8% of the workers came from rural areas. The average radius of the enterprises hinterland was 2.28 km. 80.4% of the workers were from the administrative area of the town. This fact indicates that the development of rural industry has played a very important role in rural urbanization by changing the employment structure of the rural areas. With the increase of the industrialization level in rural areas, the rural enterprises will attract more and more workers of distant areas. For example, 25.7% of the workers in Dongting Town in Jiangsu Province came from other provinces, 60% from the employment in rural industrial enterprises. Based on those field survey and empirical study on the seven established towns in six provinces, the author elaborates in this paper the role of China’s rural industrialization in the national urbanization by analyzing the employment restructuring of labors, population movement, financial source for the construction of small towns, the location of industry in town sites, and the author proposes that the development of small towns is an important approach for China to realize urbanization.