As human society enters an ‘urban age’, the need to interrogate the nature of cities and urbanization processes has become more imperative. To advance this endeavour, this article suggests that the entrenched epistemological distance between the political economy and everyday urbanism approaches must be addressed and bridged. It furnishes a theoretical approach which examines how political economic changes are shaped and contoured by sensibilities and relations around urban lifestyles, identities and the phenomenology of being urban. Above all, it is interested in how urbanization acts as an organizing logic for people to envision and build everyday projects, meanings and identities. This article illustrates these arguments by developing a reading of The Chronicle of Zhalie, a novel that is also a saga of urbanization, authored by the Chinese writer Yan Lianke. Working within the genre of mythical realism, Yan provides important points of entry into theorizing the co‐production, co‐evolution and mutual constitution of urban political economy and the social, cultural and political changes at the scale of the everyday and the local. Our analysis is conducted by way of two analytical registers: the urban desiring machine and a conception of power that is relational, performative and interactive.