Abstract: As China has entered the middle and late stages of urbanization, the primary focus of urbanization has gradually transitioned from extensive incremental expansion to structural stock optimization. This trend is predominantly reflected in the population shift from small and medium-sized cities to the core cities within urban agglomerations and metropolitan areas. Based on an analysis of data from the Sixth and Seventh National Population Censuses, the population in the administrative areas of small towns in Qingdao, Shandong Province demonstrated a significant contracting tendency overall from 2010 to 2020. The main factors contributing to this population contraction in the administrative areas of Qingdao's small towns encompass changes in the spatialtemporal patterns of county regions, disparities in urban construction, institutional designs, the inherent laws of urbanization, the merger and consolidation of townships, and a decrease in the supply of land and other critical resources. This paper proposes categorized guidance and development strategies for small towns in Qingdao in response to the population contraction situation. These strategies include assuming the responsibility of safeguarding regional agricultural security and aspiring to become industry leaders in niche markets; enhancing ecological restoration efforts, prioritizing the improvement of town quality, and fostering the development of livable small towns; harnessing the potential of existing land resources to achieve a virtuous cycle of intensive land use and population concentration through major projects; advancing the improvement of urban functions and economic growth by establishing functional zones and upgrading the industrial system through intelligent and digital technologies; adapting to the urban-rural duality and production-oriented characteristics of small towns experiencing population contraction, increasing the flexibility of land-use structures, and establishing an integrated urban-rural public service system; and promoting the redevelopment of underutilized land in merged and consolidated townships and actively implementing comprehensive land consolidation projects within town administrative areas.