Taking Huaian as an example, the rural economic and environmental problems in economically underdeveloped areas are expounded. The results show that rural areas in economically underdeveloped areas confront with lagged economic development, serious environmental pollution and scarce shortage of equipments for treating environmental pollution. The causes of these economic and environmental problems are analyzed, including inadequate fiscal support from the local government; unscientific system for assessing government officers’ performances; backward ideas in environmental protection and imperfect laws and regulations on environmental protection. Based on these causes, the strategy of employing the circular economy to promote the coordinated development of rural environment and economy in economically underdeveloped areas is put forward. The strategy covers transforming the way of agricultural production; adjusting agricultural production structure; positively collecting funds and increasing the input on handling rural environmental problems; strengthening the efforts on promotion and education , and forming the healthy habits of consumption; enforcing supervision and establishing a professional administration team for protecting rural environment; laying stress on rural technological innovation and strengthening the force of expansion; accelerating the path of industrialization and promoting the industrialization of villages and towns vigorously.