China’s rapid economic development has urbanised a great number of rural villagers since the late 1970s. One of the significant challenges is that urbanisation entails incorporating autonomous villages into integrative cities. Village-led rural industrialisation safeguards villagers’ interests, but it gives rise to a fragmented industrial landscape and piecemeal farmland in the context of high-density small-area village settlements. Suboptimal land utilisation consumes more land resources than necessary to meet urbanisation needs and thus deteriorates environmental integrity. Townships have been leading industrialisation in the rural areas after the demise of collective manufacturing in the Yangtze River Delta. Actively pursued by the municipal and township governments, agglomeration of industrial land in Kunshan occurs during the transition of industrial ownership, which results in integrated urban built-up areas. Agglomeration of dispersed village settlements (where villagers are no longer engaged in farming) into compact urban quarters ensues, facilitated by the collective land rent arising from urbanisation. A new problem of inequality in entitlement to landed benefits between villages arises. Fair distribution of land rent as the benefit of urbanisation among villages calls for coordination at a higher level than the village.