It is widely accepted that China's agrarian economy is experiencing a profound capitalization/modernization transformation. Peasants in Houjiaying village, where I conducted my field research,however, have been excluded from this great transition and instead are experiencing unstable development. At the same time, peasants in Jingerzhuang village, only two kilometers away, are getting rich by planting vegetables and have successfully achieved the transition from "old farming" to "new agriculture." Why are people who live only two kilometers apart experiencing totally different development paths? This article intended to answer the above question and explore the formation and development process of China's "new agriculture"(both labor and capital intensive) based on the micro experiences of four villages since 1936 until 2015 in eastern Hebei Province (North China). In addition to the Manchuria Railway Materials of North China (1936-1941), local archives (including soil and water records) and statistics since 1949 are used. By using grounded theory analysis and process tracking methods, and the GIS software, we draw the conclusion that the changing natural environmental constraints (soil types and irrigation condition) and village governance structure were playing an important role during this great transition. Acknowledgement : This article has benefited the detailed comments and critique of Philip Huang, to whom I express my sincerest thanks. I also thank Zhang Jiayan for his detailed comments and advice. I deeply appreciate the assistance and support of the staff of the Nijingzhen government and township statistics station. I would also like to acknowledge my debt to Richard Gunde for his help in improving my English.