With that much money at stake, local governments tend to be reluctant to allocate land for public use, such as green space.

"If this short-sighted behavior doesn't cease, the constraints on cities' sustainability will never be broken," Cao said.

Another factor is foreign direct investment. That has also found to be positively correlated with the level of sustainability, until it reaches $3 billion.

At least 11 cities, including Shanghai, Beijing and Shenzhen, home to 21 percent of China's urban population, have crossed all three turning points, the study found. For most of the 11 cities, additional improvements in sustainability as a result of a growing population or higher GDP will be very limited.

Based on sample analyses, the research suggested Chinese cities should recognize the need to transform their growth models when the critical turning points occur.

The raw data for the USI were taken from the latest available figures in the years from 2005 to 2011, and it covers various aspects of society, the environment, the economy and resources in 185 cities that were recognized as urbanized areas by the government.

Amid the list of names, Zhuhai in Guangdong province ranked top overall, and it's considered to be a model of sustainable development. Unlike most cities in China, Zhuhai established a strict protocol to avoid introducing even profitable enterprises or industries that might jeopardize the city's environment, said Qi Jia, director of the city's Development and Reform Bureau.

"The success in Zhuhai has reminded our cities to end the process of 'polluting first, cleaning up later' and turn to the proper track of sustainable development," said Cao.

"Prevention is always cheaper than cure," said Jonathan Woetzel, director of McKinsey's Greater China office.

Following the Third Plenary Session of the Communist Party of China's 18th Central Committee, the national government stressed that a national effort was underway to improve the quality and level of urbanization.

That involves a range of measures, including making better use of land, managing population concentration and prioritizing environmental security.

The aim of the USI is to understand how China's sustainability drive is evolving and to provide references to help policymakers increase the quality of their thinking and actions. The USI also found that most Chinese cities are gradually improving their level of sustainability, especially in the social and environmental aspects.

The top 10 cities, including Beijing and Dalian, on the list of sustainability are mostly located in coastal or eastern regions, as their geographic locations are favorable for trade, the USI found.