There's a theoretical limit of 1400 villages in the entire country at that size, and that's assuming zero population in cities. I don't see how it can be true.
If a village has 1 mil, then China is probably entirely made up of something like 40 cities and 500 villages, plus some smaller stuff.
From the perspective, I would think a city of 800k is definitely midsized if you compare with China.
I'm from Brazil, and we would definitely say 1 million people is a midsized city there (I don't live there anymore). For example, have you ever heard of Campinas? Well, it has a population of over 1.2 million people, and everyone I know around the area call it a midsized city.
But no, no one in their right mind would say a 1 million people city is a village :D.
If a village has 1 mil, then China is probably entirely made up of something like 40 cities and 500 villages, plus some smaller stuff.