Urbanization is a common socioeconomic development trend. However, regional differences in urbanization, and especially in the proportion of the total land area accounted for by urban land, threaten the sustainable development of urbanization. To explore the causes of the regional differences in this proportion, we obtained data from 295 cities in China, and analyzed the proportion of urban land ( PUL) based on 11 economic dimensions using spatial econometric methods. We found that the fiscal decentralization, infrastructure, industrialization, and industrial upgrading were the main factors that affected regional differences in PUL in China, with different effects in different regions. Based on our findings, China should continue to reform its economic institutions, give local governments more economic autonomy, improve urbanization infrastructure, and promote industrial upgrading by encouraging technological innovation to stimulate more sustainable urbanization. Our results provide valuable guidance for other countries to support more rational utilization of urban land and achieving sustainable socioeconomic development.