McKinsey has a report on their website about China's urbanization and possible directions for growth that would be sustainable and support economic growth:
The question is not how big, but how tall can China’s cities get. China’s urbanization is already well-advanced with over 600 million people living in 800 cities spread across the country in a relatively dispersed pattern. Looking forward, a tidal wave of urban migration on the order of 15 to 20 million long-term residents a year will continue to surge into Chinese cities as a result of increasing perceptions of urban opportunity, as well as the slow and steady move towards larger-scale, more capital-intensive farming. At this rate, China will continue to build out its cities over the next 20 years and the country as a whole will achieve a 70% urbanization rate by 2030. China could continue to add an annual 1,500-plus buildings that are more than 30 floors tall, equivalent to a new Chicago every year, resulting in more than 950 cities by 2030.1
The costs in the current dispersed growth model, however, are unacceptably high. Arable land resources will shrink rapidly. The finances of smaller cities will be stressed, potentially to the breaking point as land and labor costs rise and expectations of environmental performance and social benefits for residents—including migrants—increase. The model is also wasteful, as much of the new investment is of low quality. The average lifespan of a building in China is closer to 20 years than to the norm of 40 or more in OECD nations. Planning is done in a cookie-cutter approach with local authorities copying one another in a lemming-like fashion, reflecting the shortage of planning skills and the pressure on cities to cope with migration as well as the state’s easy access to capital. This results in overcapacity and, often, inappropriate design that is essentially wasted. Industrial capacity in particular is added stochastically, sometimes with little reference to actual demand. Socially, cities are becoming incubators of unrest as slowing urban job creation and dependence on heavy industry for economic growth threaten to create a two-tier society.
There is a spatial alternative, given China’s capital surplus and the government’s ability to implement policy. If China were to encourage the growth of hub-and-spoke clusters, or even megacities with denser populations and more concentrated urban footprints, the average height of buildings could double but the burden on China’s resources would diminish as cities built up, not out.