Abstract: In the face of the dilemma of small towns, it is urgent to scientifically identify the characteristic elements of small towns and explore the strategy of characteristic construction. Based on the concept of ‘industry, city, people and culture’, this paper analyzes the new connotation of the characteristics of small towns, and constructs the characteristics identification system of small towns from the multi-dimensions of ‘industry development, town style, living environment and cultural resources’. Taking Xinghua City in Jiangsu Province as a typical case, the paper adopts comprehensive evaluation model and cluster analysis method to accurately identify the characteristic elements of small towns, and further puts forward the construction strategy of characteristic classification of small towns. In order to provide effective theoretical support and practical guidance for the identification and construction of characteristics of small towns in China.