In recent years,more and more scholars considered that in the future urbanization it will be the important driving force to promote economic increase in China,which challenges the traditional theory that urbanization derived from industrialization.Based on the previous research,the paper quantitatively analyses the relationship between urbanization and economic development and the mechanism of urbanization to economic increase in China by using analytical models and statistical data.Results show that:from 1978 to 2008,China's urbanization presents logarithm relevant to economic increase and both has a long dynamic equilibrium relationship;the direct facilitating effect of urbanization on economic development is not obvious,urbanization is more as a result and a phenomenon of economic development,but through the urbanization,the relavant factors especially the key factors such as physical capital,human capital,knowledge capital and industrial structure which can promote economic growth can be agglomerated well and thus produce a good spillover effect on economic increase.In 1978-2008,by giving an impetus to the agglomeration of physical capital and human capital,urbanization further power the development of the whole economy, but this spillover effect is still not desirable,the agglomeration action on higher production factors is limited.Therefore in the 21st century fostering the agglomeration function of urbanization should be paid more attention in China,and we should not simply go in traditional development such as simple quantitative expansion,but focus on the agglomeration function of a city to higher production factors.The development way of China's urbanization should be transformed from "seeking quantity and light" to "seeking quality and strong".