Urbanization—which will push demand, and industrial, urban and rural restructuring—is a process China must experience in order to achieve modernization. During this time, more and more farmers will join the ranks of urban residents.

Since the implementation of reform and opening-up policies, China has undergone rapid urbanization. Although remarkable achievements have been made in the process, problems and conflicts have also been accumulating.

In 2012, China's urbanization rate reached 52.57 percent, while the ratio of urban hukou holders—or those with urban permanent residency permits and accompanying benefits—only stood at 35.29 percent.

Meanwhile, sustainable development cannot be realized by relying entirely on a cheap labor force, extensive energy consumption and low costs. In this sense, urbanization will inevitably shift from an expansion based on quantity to one based on quality.

Moreover, a huge population coupled with environmental degradation has forced China to take its national conditions into consideration and actively—yet prudently—push forward urbanization with Chinese characteristics.

In the future, a major task of China's urbanization is to citizenize the 200 million migrant workers living in the cities, along with the 10 million migrant workers heading to the cities each year. To this end, the Chinese Government should reform its household registration system, ensure that all migrant workers have equal access to public services, and expand the basic pension system, basic medical care and low-income housing for permanent urban residents.

With urbanization in mind, China should come up with a rational plan to better distribute its population by connecting cities of different sizes with small towns through comprehensive traffic and information networks.

Efforts should be made to prevent urban diseases and build green, low-carbon cities, and more attention is needed to ensure that sufficient resources exist to complement expanding populations. Per-capita land construction should be controlled to no more than 100 square meters to avoid blind expansion. Focus should be on creating jobs, encouraging entrepreneurship and innovation, improving infrastructure and public services, and pushing the construction of green, smart and humanistic cities.

The harmonious development of urban and rural areas should be promoted to narrow the rural-urban gap and encourage common prosperity. China should stick to pushing forward the integration of urban planning, infrastructure and public services, and facilitate the free flow, equal exchange and balanced allocation of public resources.

Finally, the roles of the government and the market in urbanization should be made clear to eradicate systematic obstacles. The government should carry out reforms on the household registration system, the land system, social security, finance and taxation, administrative divisions, etc.

It should gradually separate social benefits from hukou, improve population administration to link household registration with the residence permit system, and enact policies linking land increases for urban construction to the size of the agricultural population that settles down in cities. Sustainable public fiscal as well as investment and financing mechanisms should be put in place to provide funds for basic urban public services and infrastructure construction.

This is an edited excerpt of a speech by Xu Xianping, Vice Minister of National Development and Reform Commission, at China International Urbanization Forum 2013 held in Shanghai on March 30-31