This paper provides a literature review on urbanization in China. Research findings indicate that PRC’s urbanization is incomplete; the level of urbanization lags behind its industrialization and development status; and while there are too many small cities, the large cities in China are not large enough. These are mainly because of the institutional constraints of the Hukou system and land system on labor mobility, and have led to segregation, efficiency loss, distortion in the urban system and adverse impacts on equity, as discussed in the paper. Finally, major policy recommendations are offered for removing the distortions and steering China’s urbanization onto an efficient and equitable path.
