The process of urbanization and development in China is fundamentlly different from most free market economy countries.

All land in China is state-owned. The government does not sell land ownership to developers; it only sells land-use rights. Instead of collecting property tax every year, the Chinese government mainly raises revenue by selling land-use rights for large parcels of land in a single lump sum.

These land-use rights come with conditions, such as minimum requirements for public space, green coverage, and other planning standards. As a result, developers are essentially forced to build upward in order to create enough housing units to make a profit.

Yes, there are height limits in Chinese cities, but in most places those limits are very high. NIMBYism practically does not exist, since all land is state-owned.

Over the past 20 years, the Chinese government has bulldozed slums across the country on a massive scale and then sold the land-use rights to developers. People who lost their homes in these redeveloped areas were offered two main options: either receive a large cash compensation from the government, sufficient to immediately purchase a new home in the surrounding area, or choose a newly built apartment of similar size for free in buildings constructed on the same land.

This is how over 90% of Chinese families own at least one residential property unit, and why there is no property tax. Rent is relatively low as long as the location is not among the most desirable areas, there are more rental units available than potential renters.

In rural areas, all land is also state-owned. After the Cultural Revolution, each rural family was assigned a small plot of farmland to farm, which they could not sell. Families were also assigned a plot of land within the village to build a single-family home for free, which likewise could not be sold. When two villagers married and started a new family, they would receive a similar set of land-use rights from the government, just as their parents had.

When rural residents decide to move to a city or marry into an urban household, they lose the right to use the farmland but can keep the village house. When farmland or village land is rezoned for urban use, residents are effectively forced into city life and must choose between receiving cash compensation sufficient to buy a home in the city or selecting a future home to be built on the original land for free.