Improvements in rural health care in China in the 1950s, 1960s and 1970s were largely due to the development of cooperative medical schemes (CMSs) and the establishment of a three-tier rural health network. Since the economic reforms were instituted in the late 1970s, the financing and delivery of rural health services have seen many changes, some positive, others not. Most CMSs have collapsed. In the absence of CMSs, the rural population has to pay for health care out-of-pocket and poor families have greater difficulty in getting access to essential health care. In the meantime, emphases of health services have tended to shift from lower to higher levels, from preventive to curative services, and from planning and management to market forces. This paper outlines the evolution of CMSs, reasons for their collapse, and their likely impact on rural health services. The main focus is on the development of a new generation of rural cooperative health care schemes, given their importance in the process of consolidating the rural three-tier health network after the impact of the economic reforms: the characteristics of some schemes, the apparent conditions for success, and government policy towards the development of cooperative health care financing are presented.