Abstract: This paper first analyzes the development of small-scale peasant economy in China, and then explores its origin from the perspective of theory and China's basic national conditions, finally synchronously discusses the way out of small-scale peasant economy in China combined with “Four Modernizations”. Research results are as follows:the current small-scale peasant economy plight is the outgrowth of the rigid resources endowment constraints of China’s “a large population with relatively little arable land”; in the future, the key to transforming traditional small-scale peasant economy lies not in the reform of existing elementary economic institution, but in the relief of the tense relationship between people and land by reducing the number of farmers. The establishment of synchronous development strategy of “Four Modernizations” points out the direction for solving small-scale economy problem. And only by realizing the synchronization and coordination of “Four Modernizations” in the interaction process can China’s small-scale peasant economy find its fundamental way out. Henceforth the strategic development of small-scale peasant economy should focus on resource factors such as land, people, and money, innovating development ideas, making efforts to achieve reasonable and intensive utilization of land resources between urban and rural areas and that between workers and peasants, rational and orderly transfer of the rural population into industry and towns, as well as the reasonable coordination of interests distribution mechanism between urban and rural areas and that between workers and peasants.