In 2001, small towns experienced overall advancement of household register management system reform. The State Council approved and transmitted Proposals on Advancing Household Register Management System Reform in Small Towns issued by the Ministry of Public Security, fully put forward the aims, principles, scope and contents of advancing household register management system reform in small towns.

The rural land use right was allowed to transfer reasonably. The Central Committee of the Communist Party of China released Circular Concerning Work on Transfer of Farmers' Contracted Land Use Right, set up the principle of complying with laws, being voluntary and profitable, made clear that the main body of land transfer remained to be farmers and the profits in transfer went back to farmers.

The pilots of rural taxation reform saw continuous advancement. In the spirit of Circular on the General Office of the State Council Concerning Problems of Related Departments on Rural Taxation Reform Pilots Work, the rural taxation reform still focused on pilot work in Anhui province. The pilot work reduced farmers' burden (by 25 percent above), guaranteed the necessary expenditures of grass roots administration and compulsory education, and gained phase achievements.

The rural financial system reform continued to be deepened. The rural credit cooperative reform pilot in Jiangsu was under way to promote the property right system reform of rural credit cooperatives.