Anthropogenic activity interacts with urban form and inner metabolic processes, ultimately impacting urban sustainability. China’s cities have experienced many environmental issues and metabolic disturbances since the nation-wide market-oriented “reform and opening-up” policy was adopted in the 1980s. To analyze urban reform policy impacts and metabolism sustainability at a settlement scale, this study provides an integrated analysis to evaluate settlement metabolism and sustainability using a combination of emergy analysis and sustainability indicators based on scrutiny of two typical settlements (one pre- and one post-reform). The results reveal that housing reform policy stimulated better planning and construction, thereby improving built environmental quality, mixed functional land use, and residential livability. The pre-reform work-unit settlements are comparatively denser in per capita area but have less mixed land use. Housing reform has spatially changed the work–housing balance and increased commuting travel demand. However, short commuting distances in pre-reform settlements will not always decrease overall motor vehicle usage. Integrating non-commuting transport with local mixed land-use functional planning is a necessary foundation for sustainable urban design. Functional planning should provide convenient facilities and infrastructure, green space, and a suitable household density, and allow for short travel distances; these characteristics are all present in the post-reform settlement.
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