The country's population, the world's largest ahead of India, is forecast to grow to about 1.4 billion by 2015 from 1.32 billion in 2008. More than half of its populace will be living in cities by then, China's National Population and Family Planning Commission said.
The huge surge in urban population results from China's industrialization, which has encouraged the greatest-ever migration from countryside to towns, The Daily Telegraph in Britain reported.
Population Commission Director Li Bin says about 700 million Chinese will be living in cities by 2015.
The Telegraph reported Sunday this rapid population move to industrial hubs for better-paying factory jobs is posing growing challenges for local governments.
These challenges include a chronic shortage of affordable housing, low wages, a rise in violent crime and a widening gap between the rich and the poor in the Communist country.
The country has faced a number of labor strikes in recent weeks at its automobile and technology plants with young workers demanding higher wages because of rising inflation.
Any labor shortage could also impact China's economic growth, which thus far has been growing at near double digit rates for the past 15 years. The World Bank now estimates the GDP growth by 2020 could slow to 7 percent annually.
This could make it difficult for the government to create the millions of jobs needed to sustain a constant rate of employment, the report said.
The move to the cities is also hurting China's huge rural economy as more villages lose able-bodied men and women.