Several countries and regions have regulations in place to provide standards for the welfare of production animals, which have implications for breeding, management and trade. In the chicken egg production industry, the welfare impacts of this are not well understood. In the past decades, free-range systems were widely used for local chicken breeds in poultry industry in China, but their use has gradually declined due to the lower competitiveness compared to commercial cage systems. However, the practices of free-range systems for hens raising have gradually increased again over the past decade, as consumer individualized demand for higher food quality and animal welfare has increased. We recruited 14 free-range farms and 45 cage farms from Beijing, Shandong, Hebei, Anhui, Yunnan, Gansu and Jiangsu provinces in China, for an evaluation of hen welfare, production and economic outcomes from farm operations. This study provides data for the welfare outcomes of laying hens in China and preliminarily explored the relationship between welfare level and economic income within farming system types. The researchers visited the farms and used Welfare Quality measures to investigate the welfare, and farm self-reported profits. Nonparametric Mann–Whitney U tests were used to compare the welfare scores between cage and free-range rearing farms. Correlation and regression are used for the analysis of the animal welfare scores, economic data, and production metrics. The general income from free-range farms was linearly correlated with red mite score and stocking density (p < 0.001 and p < 0.05, respectively). The results showed less centimeters of feeder and drinker space per animal in the free-range system than in cage systems (p < 0.05 and p < 0.01, respectively). Welfare scores for both the stocking density and beak condition were significantly better in the free-range systems than the cage systems (p < 0.001), as were qualitative behavior assessment scores (p < 0.05). The total egg production and peak egg production in cage farms were much higher than in free-range farms (p < 0.001), and egg loss rate was significantly lower (p < 0.001). While the production efficiency of free-range farms was lower than that of cage farms, general income per 10,000 hens was actually higher. Our results provide some evidence that some welfare indicators and general income (per 10,000 hens) in free-range farms in China were better than those of cage farms. The results indicate that better parasite control and lower stocking densities may result in improved hen welfare on free-range farms and potentially improve profitability. The level of welfare and economic benefits of free-range farms vary widely, and there was potential room for improvement in feeding space, drinking water space and human–animal relationship.