Amidst global sustainability challenges across domains such as energy, water, and transportation, China’s urbanisation process presents unique socio-economic dynamics, particularly following the Reform and Opening Up policy. The existing literature has not fully captured the complex interplay between urban growth and sustainability challenges in China, nor has it adequately explored the phased nature of urbanisation informed by evolving policies. This paper provides a comprehensive review of China’s urban transition, emphasising its evolution since the Reform and Opening Up policy. Through systematic analysis, it delineates the multifaceted nature of urbanisation, reflecting on policy impacts and socio-economic shifts. Findings indicate transformative urban growth characterised by new challenges in environmental sustainability, social equity, and urban–rural integration. The research unveils the transition to a human-centric urban development model, highlighting policy shifts towards sustainable practices. The results suggest a nuanced urban–rural convergence, advocating for participatory governance and balanced growth. The unique contribution of this study lies in its empirical and theoretical examination of China’s urbanisation within a global context, offering a critical perspective on policy formulation and sustainable urban development.