Urban Imbalance in China Driven by Land‐Based Financing: Challenges for Sustainable Resource Management

China's rapid urbanization process has been characterized by a pronounced mismatch between land urbanization and population urbanization. This paper provides a new perspective on the root causes of this divergence, identifying local government reliance on land‐based financing as a pivotal factor. A theoretical framework is constructed to explore both the direct pathways and indirect mechanisms through which land financing contributes to this urbanization disequilibrium. Based on panel data from 31 provincial‐level regions across China from 2000 to 2017, the study empirically validates the framework using a mediating effect model. The findings indicate that land financing directly promotes the physical expansion of urban areas, resulting in spatial growth that outpaces demographic changes. Indirectly, land financing alters internal migration patterns through three main channels: the land expansion channel, the population attraction channel, and the population displacement channel. These channels are further influenced by variables such as urban service provision, urban–rural income disparities, and escalating urban housing costs. Furthermore, the paper differentiates the consequences of two land financing approaches: land conveyance financing (LCF) and land debt financing (LDF). Results show that while LCF plays a strong role in driving urban growth, it exacerbates income inequality; in contrast, LDF increases housing prices, hampers service efficiency, and exhibits a delayed effect on the imbalance in urbanization. This study underlines the systemic risks linked to excessive dependence on land‐centered financing and emphasizes the urgency of reforming China's urban development model. Encouraging more sustainable land financing mechanisms is essential for achieving coordinated urbanization, reducing inequality, and safeguarding long‐term environmental and resource security.