This paper reviews the crop-paulownia (Paulownia elongata) system in China. We focus on the system's characteristics and the impact of government policies on its development. When paulownia is intercropped with winter wheat, their different growth periods and root distributions result in more efficient use of water and other limited resources. In addition to timber production, paulownia trees on cropland enhance the microclimate and therefore improve wheat yield and quality. Intercropping also stabilizes farm income and reduces farm risk by diversifying agricultural activities and providing windbreaks and shelters that stabilize crop production over time. China's rural reform initiated in 1978 is a major source of the rapid development of the system in the past decade. The reports of the great performance of the crop-paulownia system, along with its high tolerance to natural conditions, are likely to make it attractive and adoptable to other countries.