China’s rapid urbanization since the 1980s has been facilitated by institutional changes in land rights that also have profoundly impacted on the resultant urban physical forms. The welfare of rural peasants has to be considered in the transition of collective land rights so as to promote urbanization inclusive to rural-urban migrants. The socioeconomic transition from plan to market provides a great opportunity to understand the formation of China’s cities in the context of institutional change to land rights. Consequent fragmented structure of land use without land use planning that ensures provision of public goods and facilities seriously compromises ecological integrity and optimal utilization of scarce land resources, a symptom of land rent dissipation. Under provincial governments that were the first-tier local governments below the central state, there were two parallel administrations of governance: prefectures, which governed counties, and cities, which were directly responsible to the provincial governments.