Producing food by cultivating crops and raising animals was a most important step forward in the development of human history. Around 10,000 years ago, people moved from an economy of gathering to one of producing, and entered the New Stone Age. Before that, people maintained their lives by picking wild fruits and other plants, and hunting animals. In order to look for food, they lived a nomadic life, but cultivation of grain crops made them settle down, thus the earliest villages appeared.

Ruins of the New Stone Age can be found throughout China's north and south. This period saw the emergence of many distinctive primitive cultures, most noticeably the Peiligang Culture in Henan Province, the Hemudu Culture in Yuyao in Zhejiang Province, the Yangshao Culture along the middle reaches of the Yellow River, the Maojiayao, Banshan and Machang cultures along the upper reaches of the Yellow River, the Dawenkou Culture along the lower reaches of the Yellow River and the Hongshan Culture in Liaoning Province.

China was one of the first countries to see the emergence of agriculture. Finds at the ruins of the Hemudu Culture in Yuyao and the site of the matriarchal society at Banpo Village near Xi'an, which all date back 6,000 to 7,000 years, include rice, millet and spade-like farm tools made of stone or bone. The spade was the most typical farm tool of that time. The Hemudu Culture site in particular yielded a large number of spade-like tools made from animals' shoulder blade bones. Among the artifacts from the sites of the Peiligang-Cishan Culture in north China, millstones for husking millet are quite common. The Hemudu site, about 7,000 years old, was one of the earliest New Stone Age locations along the lower reaches of the Yangtze River. Archaeological studies have proved that the area of Hemudu at the time was covered under large tracts of marshland, providing suitable conditions for cultivating rice and developing farming. At the sites, indications of rice cultivation are in great abundance, as piles of rice grains, husks, stalks and leaves have been found there. In some places, the piles were one meter high. Examinations reveal that the rice grown at Hemudu was long-grained non-glutinous rice, and is the earliest example of artificially-cultivated rice that has been found in China to date. The relics are also the oldest rice found so far in Asia. This verifies that China was one of the key areas in the world where rice cultivation originated and reflects the advance of farming along the middle and lower reaches of the Yangtze River during the New Stone Age.

During the Spring and Autumn Period (770-476 BC), two revolutionary improvements in farming technology took place. One was the use of iron tools and beasts of burden to pull plows, and the other was the large-scale harnessing of rivers and development of water conservancy projects. These developments were widely spread during the ensuing Warring States Period (475-221 BC).

Before the Spring and Autumn Period, farm tools were mostly made of stone or wood. Human labor had to be employed to pull primitive plows. Farming areas were strictly limited by the natural environment. Iron plows pulled by cattle could plow larger areas of farmland within a shorter period of time, in addition to being able to plow deeper. This enabled the opening up of the desolate Loess Plateau. Improvements in iron smelting technology and the extensive application of iron tools served as a great impetus to the economy of the Warring States Period.

Dikes for controlling water extended alluvial plains with water conservancy facilities for farming until they covered most areas in north China. Several noticeable water conservancy projects of the Warring States Period were completed. Li Bing, a local official, organized the building of the Dujiang Dam in today's suburban Chengdu, Sichuan Province, which rationally solved the problem of diverting floods and irrigating farmland. This project greatly promoted agriculture in the region, and even today still irrigates more than 500,000 hectares of farmland on the Chengdu Plain. Another canal called the Canal of the State of Zheng played its part in developing agricultural production in the Guanzhong region in today's Shaanxi Province.

Economic development promoted urban prosperity. According to records, Linzi, capital of the State of Qi, had a population of 70,000 households and was crowded with carriages, carts and pedestrians. Yingdu, capital of the State of Chu, was no less bustling. Someone described the city by saying that the streets were so crowded with people that brand-new clothes put on in the morning got terribly worn by the evening.