Abstract: The development of China’s agricultural factor market is necessary for the establishment and further improvement of the socialist market economy.The adjustment and optimization of rural industrial structure and agricultural production structure depends on the optimization of an agricultural factor market.Adjustment of factor market is the precondition of the optimization of industrial structure.A well-developed agricultural factor market is also beneficial to the improvement of agricultural factor utilization and productivity，further development of rural economy，the increase of rural income，as well as reducing rural-urban inequality.The main cause of rural-urban inequality lies in the lag of development of agricultural factor market.It is also the result of catching-up development strategy，initial capital accumulation as well as the dual track rural-urban economy.Through the dual track rural-urban economy，agricultural prices are set lower than market prices.The resulting price scissor between industrial and agricultural prices is the main channel through which the initial capital was accumulated.Thus，the development of agricultural factor market is at the heart of issues such as dealing with the relationship between government and the market，the reform of rural-urban dual track economy，as well as the healthy development of market exchange system between urban and rural factor markets under rural-urban integration.

Key words: agricultural factor market, rural-urban dualism, rural-urban integration, rural economy