Previous researches on poverty under Chinese state socialism placed a disproportionate emphasis on rural areas. As a result of the social economic restructuring after the implementation of economic reform, the urban social space in China has been undergoing a remarkable transformation and reorganization in recent years. While some social groups become rich earlier, some others are losing their advantages in the social economic system. They are suffering deterioration in living qualities, and form the so-called "urban poor" or "new urban poverty" in transforming urban society. The presence, the living status, the social behavior, and most importantly, the spatial distribution of such a special group of people are playing more and more important roles in the construction of urban space and urban landscapes in China. This article stresses the urban poverty under political transition and economic transformation. This research aims to examine the spatial distribution of urban poverty in China from the perspective of social geography through the case study on Nanjing City. The data used includes government records on social assistance recipients, as well as materials gathered from questionnaire survey and interviews in poor communities. We argue that the "social equity" has disappeared since the economic reform and the ensuing urban transformation in 1984. The economic transition occurring in China is creating new sources of urban poverty populations, which are significantly different from the traditional urban poor comprised of the "three nos" in the socialist era. In this paper we explore the linkages between the transitional nature of state economy and the new urban poverty in mainland China.This paper also analyzes the causes and mechanism of urban poverty. The research shows that the spatial distribution of urban poverty is both different from the "slum" aggregation in other third world countries, and different from the regionally concentrated rural poverty in China. We argue that the decentralized and stochastic spatial pattern of urban poverty in China is driven and precipitated by the state housing allocation policies during the past 50 years. It is suggested that with further implementation of housing reform and commercialization of housing market, urban poverty will exhibit greater spatial concentration, with poor households moving toward the urban fringe areas and gradually forming poor communities outside the urban center. Based on the case study of Nanjing City, we propose a theoretical framework addressing the changes in the structure of economy, current welfare system, and social spatial organization of urban populations to understand the growth of new urban poverty in China. The changing composition and spatial distribution of urban poverty population are discussed.