Fred Hu, chairman of Primavera Capital Group and former Greater China chairman for Goldman Sachs Group, said urbanization is a complicated process that does not only involve the concentration of people but also the concentration of industries and service sectors.

"Without concentration of industries and available job opportunities, transferring rural residents to become urban dwellers is meaningless. It would merely be a change from rural poor to urban poor," said Hu.

Hu also suggested abandoning the hukou (household registration) system, which excludes urban migrants from equal access to healthcare, education and housing services.