China's burgeoning middle class will have expanded to 600 million people by the year 2020, according to a government think tank.
As a result of the continued rapid urbanisation, the country will be able to maintain growth at between 7% and 8%, despite fears of slowing prosperity.
Chi Fulin, Executive President of the China Institute for Reform and Development (CIRD), said: "As urbanization will create huge domestic demand potential, China still has ample room for transition and reform for the coming decade."
Western analysts have previously voiced concerns of social implications of China's growth sustainability.
CIRD said China's urbanisation rate reached 51.3% in 2011, leaving fewer people in rural areas than in any point in history.
Amid the country's envious growth rate in recent decades, millions of farmers have left the country to become workers in cities and towns.
As a result, middle-class consumers will spur investment demand by at least 40 trillion yuan (£3.92trn) over the next 10 years, Mr Chi said.
He also predicted that domestic consumption will replace investment to become China's major engine driving the economy.
Residential consumption in China, he said, would jump to 30 trillion yuan (£2.94trn) in 2016 from the 2011 figure of 16 trillion yuan (£1.56).