Multiple small- to middle-scale cities, mostly located in northern China, became epidemic hotspots during the second wave of the spread of COVID-19 in early 2021. Despite qualitative discussions of potential social-economic causes, it remains unclear how this unordinary pattern could be substantiated with quantitative explanations. Through the development of an urban epidemic hazard index (EpiRank) for Chinese prefectural districts, we came up with a mathematical explanation for this phenomenon. The index is constructed via epidemic simulations on a multi-layer transportation network interconnecting local SEIR transmission dynamics, which characterizes intra- and inter-city population flow with a granular mathematical description. Essentially, we argue that these highlighted small towns possess greater epidemic hazards due to the combined effect of large local population and small inter-city transportation. The ratio of total population to population outflow could serve as an alternative city-specific indicator of such hazards, but its effectiveness is not as good as EpiRank, where contributions from other cities in determining a specific city's epidemic hazard are captured via the network approach. Population alone and city GDP are not valid signals for this indication. The proposed index is applicable to different epidemic settings and can be useful for the risk assessment and response planning of urban epidemic hazards in China. The model framework is modularized and the analysis can be extended to other nations.