A town is a spatial organic complex of multi-function and multi-department,consisting of natural and artificial environments.In forming rational economic network or the town system of towns and villages as an integral whole combined with large,medium and small towns,playing the functions and parts of towns at different levels,forming various economic centers depending on large and medium cities and developing small towns with better conditions step by step proportionally and in a planned way,all of which mentioned above plays an important role in promoting rural economic development,ensuring goods and materials needed by cities,raising social labour productivity and eliminating three major differences.They are also of practical significance to transform agricultural surplus labour on the spot,to control the developing scale of large cities,to achieve the town system with Chinese characteristics,and to accelarate the course of four modernizations. The paper introcuces the general situation of town development in China, and discusses the concept and features of small towns,and the position and functions of small towns in the town development in China.It also studies the existent problems of small town development and ways to solve them.In a word,the development of small towns must be from the practical situation of.China.Through studying their histories,present conditions,material potential and developing direction,one can make the best use of their situation to develop towns which possess the developing conditions so as to race against construction time and raise investment benefit,as well as to prevent and avoid the disadvantage of large city development.