Decoding the “China Paradox” of Urban Polarization: The Push–Pull Dynamics of Land Allocation Bias and Sustainable Urban Governance

Achieving sustainable urban development and optimizing the urban scale structure are central priorities in global governance. However, the relentless population agglomeration in Chinese megacities, despite astronomical living costs, presents a prominent “China Paradox” that seemingly defies classical spatial equilibrium theories. This study decodes this paradox by endogenizing the strategic land supply behaviors of local governments. Utilizing a comprehensive panel dataset of 287 Chinese prefecture-level cities from 2006 to 2020, we construct a multi-dimensional mediation framework and a panel threshold model to investigate how the structural misallocation of land—specifically, the pro-industrial and anti-residential bias—reshapes urban migration dynamics. Empirical results reveal that this land allocation bias acts as the fundamental institutional engine driving urban polarization. Analysis of the transmission pathways reveals a complex push–pull dynamic at the core of this paradox. The artificial restriction of residential land drives up housing prices, generating a profound centrifugal “push” force. However, this dispersion effect is entirely neutralized by two formidable centripetal “pull” forces: industrial co-agglomeration fueled by subsidized manufacturing land, and premium public service capitalization financed through lucrative land revenues. Furthermore, this demographic pull effect exhibits a pronounced inverted U-shaped dynamic, peaking during the rapid growth phase but diminishing precipitously once cities cross the threshold into highly developed megacities (LnGDP > 11.525). These findings highlight the ultimate unsustainability of the land-driven urbanization model. We propose a paradigm shift towards sustainable urban governance, advocating for stage-specific land supply reforms and the transition from monopolistic land finance to a sustainable property tax system to foster a spatially just and resilient urban hierarchy.