Like here, the population moves to where the work is which is large cities, while the country villages die. So, on paper it makes sense to flatten land to make the cities bigger. Mountains are only really, really big hills - it's just landscaping on a grand scale. Environmentally I don't suppose it's that much worse than building cities - like Shangai - on mud banks at sea level. It all looks good - on paper.
I gather none of it is necessary anyway as there are thousands of empty flats no one can afford to move into. We went on holiday to Chengdu to see the pandas and passed enormous estates of multi storey flats. All empty while the people lived in shacks alongside. There's a profit making scam here somewhere!