The peasant smallholder, supplementing his income with a side job, has been a characteristic feature of modern rural China. Such peasants have variously been described as typifying "retrogression", "stagnation", or "development" in the framework of the "differentiation of peasantry" model. Today, however, that model is subject to serious doubt. The purpose of this paper is to examine transitions in the Chinese peasantry through a factual area study, focusing on the notion of the peasant smallholder with a side job as a representation of an economic condition of a Chinese peasant. The paper looks at Ding county (定県), Hebei province CRAM, in the early 1930s. At the time, the population of this region was engaged in diverse farming activities, largely determined by the various types of soil in Ding county. Peasants generally practiced single cropping of minor grains and raw cotton while three crops of major grains were taken over a two-year cycle. These cropping systems were accompanied by two types of cotton production : for domestic use in "grain areas", and for sale in "cotton areas". For the former, cotton handicrafts were a relatively unimportant element in the household economy, but for the latter, they were essential. In each household economy, we can witness a visible tendency toward diminution of the acreage devoted to cotton cultivation, in tandem with the commercialization of cotton handicrafts. However, we cannot accept the widely held explanation of the reduction of per-capita cultivated acreage as a simple outcome of population increase. A fuller explanation must take into consideration the peculiarity of commercialized cotton handicrafts, which depended heavily on soil type, and also on cotton-cropping practices and the mode of employment of the male labor force. Thus our investigation draws us to a recognition of the significance of prevalent conditions in each area. This approach will lead us to a view that sees the integration of the peasant economy into commercialized cotton handicrafts as the main factor in diminishing cultivated acreage. An increase in family income resulted from engaging in commercialized cotton handicrafts, giving rise to the institution of "partial inheritance", which in its turn led to the reduction of cultivated acreage. This will adequately explain the socio-economic development of the Chinese peasantry, resulting in the emergence of the peasant smallholder with a side job as a characteristic figure of modern rural China.