This article illustrates the impact of changes related to market reforms and environmental policies on the economic structure in rural China by providing a comparative analysis of several villages in a poor township in Beijing municipality. Two main concomitant phenomena are affecting agricultural and non-agricultural choices in the studied area. First, the introduction of market mechanisms is encouraging local population to engage in new activities that are closer to local comparative advantages. Second, rural households are facing new constraints in the form of environmental protection measures, which have weakened traditional insurance channels provided by forest resources and cattle stock. Drawing on household-level survey data and interviews with village heads conducted in ten villages of Labagoumen township in December 2003, this article analyzes households decisions in response to market reforms and environmental constraints. We find large disparities both between villages and households in the diversification process and discuss the reasons of observed inertia in the region, most households still heavily relying on corn production.