China's urbanization has accelerated during the era of reform. While there has been real progress in urbanization, the process has also been skewed by several administrative measures designed to foster urbanization and economic growth. According to a popular view, as many as 70 per cent of China's administrative jurisdictions now come under the rule of urban governments. This must be an exaggeration given that many parts of China are still essentially rural. This article examines three measures – turning prefectures into cities (di gai shi), turning counties into cities (xian gai shi), and turning cities and counties into urban districts (xian shi gai qu) – that have contributed to “inflated urbanization.” Five propositions – budgetary, urbanization, regulatory, organizational streamlining and policy incentive – are discussed to see if the three measures have either originated from or have affected them. We find that while the regulatory observation is relevant only for the measure of xian shi gai qu, the other four propositions are useful, though to varying degrees, for understanding the logic of the changing “city system” in the past two decades.