Great changes have taken place in China’s agricultural and food markets in the past several decades. However, the impact of the transformation brought by modern supply chains on the welfare of farmers in China is unclear. This paper attempts to understand whether or not the recent changes in China’s food economy have contributed to an improvement in the welfare of small, poor farmer. It also seeks to identify whether or not the main marketing institutions in China’s horticultural economy are consistent with a system that can deliver food safety. To achieve our objectives, we use a data set collected in 2007 by ourselves which includes representative tomato- and cucumber-production farmers in Shandong Province. We use the information from the survey to describe the emergences of production systems and marketing structures. The data are also used to examine whether the small or large farmers (or rich or poor ones) are participating in the expanding horticultural economy, and if so through which different types of marketing channels. We also examine several indicators of producer-trader behavior to understand whether China’s horticultural marketing channels is able to guarantee a safe and traceable vegetable product. The results show that despite the dramatic evolution of the downstream segment of China’s horticultural economy, most Shandong tomato and cucumber-producing farmers are selling through traditional marketing channels. Moreover, small/poor farmers are not being excluded.