China’s collective forest tenure reform will have a profound impact on the livelihoods of rural people. For the equitable implementation of reform, rural smallholders need sufficient knowledge and understanding of the opportunities and limitations offered by reform. Here, we examine rural smallholder's awareness and attitude towards the reform, across the socio-economic range, in three villages of Zhang Guying Township, Hunan province. Income level and educational background played a consistent role in knowledge and understanding of the reform, as people with low income and no formal education were more likely to be unaware and have no clear understanding of the reform. Additionally, low-income rural smallholders were more likely to convert forest to cash crops, undercutting the central government's stated objectives for the forest reform to improve forest condition. Given our results, the government needs to ensure equitable distribution of information, specifically targeting low-income villagers without formal education. The strong disparity in knowledge and understanding between wealthy and poor creates a situation where the wealthy effectively benefit from the reform, while the poor miss its opportunity. This inequality has great potential for generating future unrest and conflict and for damaging forest condition due to unsustainable or uninformed practices.