The real urbanization rate has reached 60 to 65 percent, instead of the official figure of 43 percent, a renowned economist and banker said.
That means China has about 800 million to 900 million urbanites, instead of the 517 million announced by the government.
The economist said the number is based on the World Bank's definition that a person should be calculated as an urbanite if they stay in a city for a minimum of three months.
Guo Shuqing, board chairman of China Construction Bank, said the number included people in developed regions who are not farmers and migrants and work in cities for at least three months a year.
"The new number has many policy implications," Guo told China Daily, referring to the government's efforts to integrate urban and rural development. He made the comments on the sidelines of the ongoing 17th Party congress.
First, Guo said, China should avoid a situation where infrastructure in villages sits idle.
The government launched a socialist countryside campaign last year, pumping money into building new roads and standardized houses for villages, ensuring clean water supplies in rural areas and providing healthcare for villagers.
However, a recent survey by the Chinese Academy of Social Sciences also found that there is no young and healthy labor in nearly 90 percent of the villages in China. It is possible that the migrants will not return, settling in cities instead.
"I am quite concerned that the countryside campaign will lead to much waste if the measures are not effective," said Guo.
He said it is also important that the government not ignore migrant groups in the cities, who are currently treated separately from those with urban household registrations.
Guo urged the government to reform household registration policies, which have made urban and rural Chinese live under two different systems for years.
Cai Fang, a senior researcher with the Chinese Academy of Social Sciences, also said the registration policies should be put to end soon, as: "Basically, it has prevented a person from fully enjoying the freedom of migration."
As a CPC congress delegate, Cai said the harmonious society, which is China's social development target by 2020, will allow citizens, both from cities and the countryside, to have a same social status.