Abstract: The emergence of growing land-losing peasants is becoming a serious problem at a time when China is undergoing rapid urbanization. Because of China current land tenure system, land taking policy, and hukou system, peasants have lost four types of rights to free exit. The land-losing peasants， after becoming landless, are forced to live in urban areas, resulting in so-called “forced-urbanization”. This paper shows that “forced-urbanization” leads to inefficient urbanization and social conflicts. These problems can further deteriorate unless the exit rights are given back to peasants so that China can follow the path of market-oriented urbanization meanwhile elevate peasants’ human capital.