Small towns in China have recently emerged as the most dynamic element of national development and urbanization in the post-reform era. Two types of towns in China's southern province of Guangdong are quantitatively analyzed to reveal their functional features. The county capitals and market towns are found to be different in the forms of enterprise ownership, employment structure, educational and health facilities, urban infrastructure, and in the absorption of surplus rural labor. Manufacturing dominates the employment of both types of towns, transforming them from traditional marketing centers to contemporary industrial centers. Policies should be designed to facilitate the growth of the collectively owned town industries to avoid competition with the state-owned industries.
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