Habitat International, Volume 41, January 2014, Pages 92–98. This analyzes the relationship between urban compactness and CO2 efficiency in China. A quantitative indicator of urban compactness and CO2 efficiency (CO2 economic efficiency and CO2 social efficiency) was selected and calculated using remote sensing and panel data analysis. According to data from 30 cities, urban compactness is correlated positively with urban CO2 economic efficiency, which is measured by the ratio of GDP to total CO2 emissions. Conversely, the compactness ratio shows a negative correlation with urban CO2 social efficiency, which is measured by the ratio of social welfare indicators to total CO2 emissions. These results indicate that, within China, designing compact low-carbon cities could lead to an increase in urban CO2 economic efficiency. However, if the compactness ratio is too high, the increased compactness accompanied by various socio-environmental problems will result in a decrease in urban CO2 social efficiency. Therefore, compactness entails a trade-off and this should be considered by policymakers.