The purpose of this study is to approach for the flow analysis of changing central-place functions and basic demands between the central city and the small town. Under the rural society progressed, this study examines how the small town changes in the relation to the central city. The subject of study is based on changes in demand for retail and hospitality. The small town is providing basic demands and urban services primary for the rural in the settlement system. Because of the rural depopulation and the aging of society, Retail and hospitality in the rural is reducing of the facility followed. But the majority of related researches are stocks approach. These studies are useful to find out the characteristic of small town, but is difficult to consider the influence of the central city. In this situation after this study using the function index is set up a concept model, it examines for the basis of changes in demand for the small town. The result of the analysis is that the changes of retail and hospitality are more severe in the more small town than in the central city. Whereas the small town with a population decline is consistent with the reduced number of branches, Population growth in the central city is reduced to the number of the Number of branches. The central-place function has been strengthened in the central city. While the younger generation, recreation, etc. related retail are disappearing rapidly, the mainstream of small town is grocery, home improvement, restaurants.

This paper is to describe the characteristics of the Small Towns development in Rural China. The policies to develop Small Towns have been induced for solving the problem raised during the rural reform. The changes and adaptations of rural reform processes are integrated in Small Towns. The characteristics in the process of development of Ronggang, a small town, are as follows. First, it was the fund raised by rural inhabitants that was used for construction and development of the small town, Second, by implementing the policies of selective migration, the inhabitants of the small town have been differentiated from those of rural region. Third, the activities of commerce and industry of Ronggang have progressed to joint-stock system. Fourth, Having the spatial characteristics of self- development, the small town has grown and is expected to grow higher hierarchy of settlement system.