Then the real problem is building residences outside of the reach of available transportation.
Not China's mistake. China is building 100 new cities in the interior, each for a population of ~1,000,000 during this and the next 5-year plan. The first finished was "White Horse village." The BBC has done a series of documentaries on it starting in 2005.
Here is 29Nov 2010 link to recent update text and videos:
http://www.bbc.co.uk/news/world-asia-pacific-11863108
If you want to understand modern China (the good and the bad) watch it. Many of the former peasants did not want their village changed and to be moved into high rises etc. but had no choice. Their former tiny plots are now parts of large efficient farms, not rural "suburban sprawl" anymore.
Sample text:
"... "I can't keep a pig or grow any vegetables, I have to buy everything from the shops," 70-year-old Jin Zhongzen complains. {Billy T insert: he gets rent from his former farmland and higher pay jobs are now available in the growing city.} Mr Jin is a man whose life has been utterly transformed.
Three years ago he lived in a mudbrick courtyard house in White Horse Village, a sleepy village in a verdant valley in Wuxi County, western China. He was one of several hundred million Chinese farmers still eking out a living on tiny plots of land,... Today, Mr Jin can still be found in the same valley, but home is now a sixth-floor apartment. The valley floor has been concreted over and White Horse Village has been demolished, replaced by a city - Wuxi New Town.
What has happened to Mr Jin and to White Horse Village is emblematic of
one of the most important stories of our time ... Five hundred million*** subsistence farmers were to be lifted from poverty and brought into the story of China's economic miracle by creating cities and jobs for them at home, rather than them being forced to travel to coastal China to get ahead. ..."
Now in China's coastal factories there is a sever labor shortage -10 to 20 % of the workers did not return from the interior after recent Year of the Rabbit holidays. China is going high rise and modern with fast, efficient, low-cost (to user), public transport etc. - brutally changing at a rapid pace, like it or not.
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*** 500,000,000 -i.e. China is modernizing >1.5 times the US population from subsistence farmers to world competitive urbanites in a decade! An unparalled event in human history!