The urban-rural equalized development is not only significant theoretically, but also a strategic challenge facing the coordinated development of urban and rural China. In this paper we put forward an innovative theory of URED against the background of China's urban-rural transformation. The spatio-temporal pattern, its change and driving factors of urban-rural equalized development during 1996-2009 were analyzed using principal component analysis, the Markov chain model and exploratory spatial data analysis model based on the data for 31 Chinese provinces (autonomous regions and municipalities). It is found that during the study period URED exhibited an obvious tendency of "club homogenization" in China. However, since 2003 the homogenization of the URED for entire China has weakened. Moreover, URED showed a significant geographic characteristic of "polarization" during 1996-2003. Namely, the spatial units of a high URED level were concentrated in eastern China near the coast, and the spatial units of a low URED level were located mainly in central and western China. However, this spatial polarized structure of URED was destroyed since 2003, and the spatial disparity at the provincial level has decreased. Finally, it is concluded that policies and institutional structure, economic growth and urbanization were the main driving factors of the identified URED spatio-temporal pattern and its change in China. This study may serve as a scientific reference regarding decision-making in coordinating urban and rural development and in constructing the new countryside of China.