1. INTRODUCTIONThe rapid of economic growth in China, is a fou.docx

1. INTRODUCTION
The rapid of economic growth in China, is a foundation of urban
expansion, associated with the rise in migrants in urban areas.
According to data from Statistics Bureau in China, the urban
proportion of the total populations reached 45.7% in 2008
compared to 17.9% in 1978, and is expected to reach 50% by
2020. The presence of a large number of rural labor force in the
city, tend to look for adequate and affordable housing, which
generate a peculiar outcome in most Chinese cities, urban
villages. Urban villages, or Chengzhongcun in Chinese, they
mean that the villages in the middle of the city, interact as
urban expansion surrounded them (Chung, 2009).
According to land management law in China, the ownership of
urban land is state, and the ownership of rural land is
collective-owned the village. Besides, land belonging to the
rural collectives can only used to solely agricultural and not
allowed to sell in the land market. The earliest urban village
emerged in China is due to the 1978 Economic Reforms. In
order to fulfill the investment and development, the government
tends to expropriated farmland in rural villages for urban use
because of the limit of capital and time-consuming. Therefore,
the settlement villages are been survived while their
surrounding environment dramatically development, graduate
leading to the formation of urban villages (Hao, et al, 2011).
On the other hand, rural migrants have been flooding into cities
because of the demand of cheap labour force in urban areas and
the states started to relax restrictions on rural-urban migration
after Reforms, which generate great pressure on demand of
housing. Generally, China's rental market can be segmented into
three kinds: government provided credit houses; commercial
residential building in the three level market; and renting
houses in “villages” (Hang and Iseman, 2009). However, the
social housing for low-income households provided by

government are excluded them because of the “Hukou” system,
which is the household registration system to different urban
and rural population. During the city transformation in China,
the government ignored the two weakest groups: villagers who
do not have lands and workers from village. It is undeniable
that urban villages provide a positive environment for slowing
down the unemployment problems of the villagers and the
housing problems of the latter (Hao, 2012).
Meanwhile, due to the weak government jurisdiction in urban
villages, landlords find out this is a new way to substantially
maximize income by providing low-rent accommodation to rural
migrants. In the process of farmland requisition, the state does
not provide the landlords any employment opportunities after
they losing their basis of livelihood, which causes them to have
no competitive power in the labour market in the city. The huge
profits from house renting business enable them to gain
considerable revenue and make a new livelihood. In addiction,
some of urban village are much more central location,
consequently, low cost and accessible settlements (urban
villages) became the main choice of rural migrants.
It’s obvious these illegal constructions brought mass of
potential problems to society, for instance, criminal issue and
security issue (lack of safety escape route, etc.). At same time,
construction land in urban centers is becoming increasingly
limited, which creates a conflict since land resources are
essential for the development of many cities. On behalf of
ensure cities’ further development and improvement,
governments decided to redevelopment of urban villages by
demolition-development and upgrading the spatial structure.The
China's governance pattern is from top to bottom. The
legislative power lies at the two levels of the central and
provincial levels. In February 2016, the Chinese central
government issued the “Opinions of the Central Committee of
the Communist Party of China and the State Council on Further
Strengthening the Administration of Urban Planning and
Development”, it is illustrated that ‘by 2020, the promotion and

new construction of existing shanty towns, urban villages and
dilapidated houses in cities will be complete (Liu, 2017). A
city's urban planning has its own authority in setting up
regulations and implementing rules. Therefore, policies aims to
support the redevelopment are specific for each city.Besides,
compensation standards are developed in flexible ranges, which
will result in indigenous villagers ask for the higher
compensation.
Lack of funding and the opposition from indigenous villagers
are the main obstacles that constrain urban village
redevelopment in China, so the local government usually brings
the developer into the redevelopment project to reduce the
pressure on capital. Although there are successful
redevelopment projects in which all the stakeholders worked
together and achieved a “win-win” outcome, in many cases
disagreement between the government and the urban village has
created serious social conflicts, especially the residential
displacement. Therefore, this research will concentrate on how
to propose reasonable redevelopment strategies by seeking a
collaborative network between all stakeholders. Shenzhen has
been chosen for examination for the following reasons. First,
the negative impacts of urban villages not only damaging the
urban image, but also affecting the urban structure
improvement. Second, the issues of rural migrants are related to
the sustainable economic growth of cities, as the one of the
cities in China that attracted most migrants, it is worth
examining how Shenzhen has changed its policy and redevelops
the urban villages during the urbanization process.
The structure of the research is follow. Chapter 2 summarizes
the existing literature from the relevant fields by analyzing the
relationships between each stakeholder in the urban
development process, and adding details of several types of
methods on redevelopment of urban villages. Chapter 3 provides
the analytical framework and how it is applied to the case study.
Shenzhen is the selected case study and several types pioneer
example of urban village redevelopment will be proposed in

Chapter 4. In the last chapter, the conclusions and some
recommendations on how to maximize the effects of each
participant during the process are given.
2. LITERATURE REVIEW AND ANALYTICAL
FRAMEWORK
As a unique outcome of China’s rapid urbanization, a majority
of study productions are made from the academic community,
but researches for urban villages in China are very little in
English (Yeh, 2005). Mainstream academic and policy
researchers in China have concentrated on urban villages’
position and the origins of urban village in China (Tong and
Feng, 2009). As the problem of urban villages becomes more
obvious recently, the researchers put their attention on how to
redevelop the urban villages, and negative aspects of unplanned
developments (Wang, et al, 2009). To fully understand how
stakeholders influences urban village redevelopment, the
literature review section will focus on three fields: growth
coalition in redevelopment project, methods of urban villages
redevelopment, and challenges of redevelopment in China.
2.1 Growth coalition in redevelopment project:
Urban villages’ second development is very complicated, and it
is a typical a case of the interrelationship between the varying
parties. Before analyzing urban village redevelopment
strategies, it is necessary to understand each player’s intention
and conflicts among them through redevelopment process. This
following section attempts to answer how the main
stakeholders, which are government, developers, and landlords
in urban village, contend for the benefits fulfill the
redevelopment process by introducing the conceptual theories
extracted from “The interplay between the main actors in urban

village redevelopment” (Hao et al, 2011).
Figure 1: The interplay between the main actors in urban village
redevelopment
(Source: Hao et al, 2011)
Government: Government is major force in urban village
redevelopment. In the terms of government, urban villages can
be described as ‘urban governance problems are more than
social economic problems’ (Hao et al, 2011). They believe the
redevelopment can bring economic benefits, improving
infrastructure and eliminating the problems of society, related
to re-image the city in order to get sustainable development.
Especially alleviating negative impacts are always considered as
the starting point of urban village redevelopment by local
authorities and planners. Therefore, governments always
instituted some policies to developers, and provided
compensation to landowners (Luo, 2005). When analyzing the
power structure of redevelopment projects in Shenzhen, Li and
Li (2011) found that China’s local governments are more
powerful and active than their counterparts in western countries,
which allows them to have a more important position and
authority in the power alliance.
Developer: Main focus of the developer is substantial economic
profits. Especially some good location of urban villages that are
close to commercial areas or parks, normally generate a higher
profit. The potential land value will attract developer’s to
engage in the redevelopment activities. In other way, due to the
limit government financial supplements, developers always need
to bear the compensation of landlords. In terms of general
compensation regulation, the developers compensate the
landlords by total building area. Therefore, developers always
ask local government to provide some preferential policies to
mitigate the costs of redevelopment.
Regarding the urban regeneration process, it tends to have two
sides: The first was beginning under the cooperation between

the public sector and private sector (Guo, 2005). The
cooperation between the government and the private sector is a
primary form in the market reform era from the early 1970s to
1980s. The state provides the city construction policy and land
use standards, which are operated by the personal sector. The
second side is the solely personal model. It often includes
cooperation between developers at national side and abroad,
which are the majority of development companies in the current
market (Guo, 2005). However, public authority still involved in
the initial state. Occasionally, public authorities might act the
part of developers and implement the development again from
the top to the bottom in the capacity of other companies. It is
conducive to avoiding the general restrictions on private
enterprise development plans and other regulatory controls (Li,
2015).
Landlords: Rent is one of the main income resources for the
majority indigenous residents in village. Urban village
redevelopment means for most of them to lose their living
incomes. Thus, compensation negotiation becomes a vital
process (Hao et al, 2011). Since the rental price would
definitely impact by surround infrastructure improvements and
environments, landlords are tending to do transaction on their
wealth hesitantly in order to get extended property value. In
addiction, future resettlement and social security are another
issue, which are associated with the feasibility and rationality
of urban village redevelopment (Luo, 2005). If the
compensation fee offer by government or developers is
disagreeable for landlords, it is difficult to persuade the people
to support the redevelopment project.
Chung (2009) mentioned that urban villages have their personal
joint-stock companies, which represent the "common benefits"
of the aborigines and have active functions in some village-
related activities. The joint-stock company claims to own the
village's land and usually has a large fund from the rent and
money for managing that collects from the village. This
financial force enables joint-stock companies to negotiate with

government sectors in the redevelopment because they can use
their own resources to promote development or the second
development.
In the urban village redevelopment process, the three main
entities, the local government, landowners and developers, both
have the opportunity to become investors in the transformation.
Zhao (2005) analyzed the pros and cons of each actor as an
investor. In general, due to the huge amount of compensations,
the local government will use market forces to encourage
developers to invest in these projects as we mention before.
However, some redevelopment projects, such as conservation
projects, do not have the potential to attract developers. So the
government must invest by themselves. Sometimes, if the
original indigenous residents have strong economic supports,
they will take the initiative to undertake redevelopment funds,
such as renovation projects or maintenance projects (Zhao,
2005).
However, some scholars have found that in urban renewal, local
states and real estate agent are often seen as working together to
slow down problems and prevent disputes. The whole
community and the landowners oppose the potential
collaborators to allow themselves more powerful because the
community parts are removed from the city developing plans
(Cheng, 2012). Only when all parties are satisfied with their
share of the benefits will the redevelopment be accomplished
(Zhuang, 2014).
2.2 Methods of urban villages redevelopment:
According to different redevelopment modes, urban villages
redevelopment in China can be divided into three types (Tu and
Xie, 2006).
· The first one is government oriented. The advantage is that the
government can control the reconstruction process and get land
finance. The disadvantages are high transaction cost, low
efficiency, unsustainable capital operation, or violent
demolition and relocation lead to increased social

contradictions, or trapped in the plight of “nail houses”, fierce
social conflict (Gao, 2011).
· According to Ye (2015), the second type is developer
dominance, with high efficiency and low government
transaction costs. However, the biggest disadvantage is "being
picky", which means the most difficult spaces is retained.
· The third type is the village collective leadership, with the
advantage is high efficiency, no “tartar” problems. The
disadvantage is the lack of capital and ability to control the
future. In addiction, lack of foresight resulting in low-end
reconstruction, low-level development, land use efficiency and
non-registered permanent population issues continue to
accumulate, may pay higher redevelopment costs (Guo, 2005).
Wang (2017) argues that involving the villages in the planning
process, means villages are able to understand the whole
process of redevelopment. This will allow them to participate in
the development project. It can also help to collect ideas, for
instance, point out where they feel the social amenities should
be placed.
On the model of urban village redevelopment, different methods
can be used from different perspectives. Xie (2006) mentioned
that redevelopment is generally categorized by three approaches
in terms of the rebuild scale. These three approaches are
rebuild, rehabilitation and conservation. Therein, rebuild means
demolish most of the current buildings. Rehabilitation here
represents rebuilding partly or rebuilding the needed area,
meanwhile improving some of the physical environment (such
as infrastructure, building quality). Conservation means taking
the internal environment improvement and infrastructure
maintenance as the mainly actions to redevelopment.
Cheng (2012) based on construction methods, listed two
common approaches to urban villages redevelopment in China.
The first method can be through the upgrading of the existing
urban villages. This will offer the landlords an advantage, as
their structures will not be demolished as a result of the
redevelopment. The studies further points out that the upgrading

will include the refurbishment and also improvement of the
existing structures, for instance, improving the infrastructure,
having historical and cultural construction. Waste management
lines should be properly put in place and there should be urban
planning where social amenities have been considered. The
advantage of this method is that there will be low requirements
in terms of investments and also the residents who earn a low-
income life will not be displaced. There will also increased
health and safety conditions that will enhance the living
standards of the existing settlements.
Another method is based on a demolition-development approach
(Zhuang, 2015), completely change the architectural form and
living environment of "villages in the city". During this process,
the tenants and rural migrants are forced to move to the other
areas until the buildings have been built. This process is
expensive as the landlords need to be compensated for their
land loss and also for the loss of their sources of income. There
is also a need for highly qualified planners and developers who
will take part in the planning and create of architectural designs
that can sustain the villages forever. This means that there is a
need for time to plan for these design and for the complex
drainage, infrastructure and also land for reserve and fields
(Kaushik, 2016).
The urban village redevelopments requires extensive fund
supports, Han (2004) suggest the government should consider
financing the projects through debts - where development
corporations take loans from banks to develop the villages, in
turn, the landlords pay the loans after the new buildings have
been established and they have been put in their hands.
Secondly the government can also consider buying the land
from the owners and giving an admissible compensation
package to them. They then develop the land and place the
rental buildings using the market rental value. They will then
remain to be a source of government revenue as government
property where management corporations will be put in place to
take care of the buildings and to collect the rents.

Urban village redevelopment is a special kind of urban renewal
which can learn from the experiences of urban renewal (Huang,
2005). After the Second World War, many European countries
conducted large-scale urban renewal activities. Although some
of them even lost the right way (which is mentioned in
following content) during the renewal process, most of these
countries accumulated lots of precious experiences, and been
the precursors in urban renewal filed as well. Furthermore, their
experiences can be used as references for urban village
redevelopment.
Carmon (1999) summarized European urban renewal history
into three main periods. He named the first generation as the era
of bulldozer which advocated physical determinism and
emphasized environment rebuild. On that time, the governments
wished to make better use of central urban land and drive poor
out of sight, examples are famous slum clearance campaigns.
These slum areas were frequently replaced by shopping centres,
office buildings, and cultural, entertainment centres and high
quality blocks in that time. Although among these renewal
projects, there existed some successful cases, such as Lincoln
Centre in New York. But most of those cases where new
residential neighbourhoods were built, the planners and
designers were blamed for building inhuman multi-storey
blocks, mainly apartments for families that could afford them,
and certainly not suitable for poor families.
The second era is neighbourhood rehabilitation. Carmon (1999)
called it as a comprehensive approach emphasizing on social
problems. Due to the wide criticisms of last bulldozer period,
allocation for welfare purposes as the main aim of urban
renewal is done in this era. The government and planners plan
and implement comprehensive rehabilitation programs, aimed at
improving existing housing and environments instead of
demolishing them. At the same time the government treat the
social problems and poor families by adding social services and
enhancing their living quality. Another evident feature of this
period is the emphasis put on public participation resulting in

that public opinion is always been taken into consideration
before plan implementation.
The last period is city centre revitalization. This era is emerged
under European economic depression during 1970s to 1980s.
The aim of urban renewal in this period is driven by interests in
large cities of the developed countries. The very low prices of
land and housing in the city centres began to attract both small
and large private entrepreneurs. As a consequence, after
investigating the distribution of benefit from urban renewal
programme; this period was criticized by widening the gap of
rich and poor.
The lessons learned from the experiences of European urban
renewals are that blindly emphasize environmental rebuild is
unreasonable which can lead to social dissatisfaction and
injustice for poor families. Thus, public participation should be
taken as a measure to ensure the success of renewal project. In
addition, taking relevant groups’ interest, namely stakeholders
into consideration is important in redevelopment programs. 2.3
Challenges:
With regard to the urban villages redevelopment in China, four
challenges are identified (Han, 2014). The first challenge is
hard to coordinate different parties’ interest. Urban village
redevelopment concerns the interests of village collectives,
landlords, governments, developers and many other aspects, it’s
must to find a balance of interests and coordinate the complex
interest relations. The most direct and beneficial relationship
with urban village redevelopment is the landlords, who have
strong resistance to the transformation of the village. Although
the government has protected the interests of the original
villagers to the maximum extent when making compensation
policies for demolition, they will be held large-scale protests
and petitions if they are slightly dissatisfied, which may caused
social instability, and governments or developers have to bear
great political risks.
The second one is the cost is huge. Urban villages are normally

densely built and with high construction cost. It also brings
considerable rental income to the landlords every year, which
means the amount of compensation is huge. Especially in the
Pearl River Delta of Guangdong Provinces in China, the cost of
redevelopments involves hundreds of millions Yuan or even
tens of billions Yuan, could discourage some of developers
(Hao et al, 2011).
Han (2014) also points out the third one is the challenges of
property rights. There are a large number of illegal buildings in
the villages in the city. If the property rights of illegal buildings
are recognized, illegal activities are encouraged. If the property
rights are not recognized, considering the lack of legal basis and
the universality of illegal acts, it is difficult to forcefully
dismantle the illegal buildings.
The fourth challenge is lack of policy and regulatory support
(Han, 2014). The restructuring and transformation of the village
in the city is a new thing, involving complex issues such as the
household registration system, the land use system, the fiscal
system, the investment system, the urban management system,
and the administrative management system. At present, there is
no clear and uniform regulation in national laws and
regulations, so there is no unified law as the enforcement
standard in practice.
There are now many existing cases of urban villages
redevelopment in China to draw experiences from and these
cases show that the collaborative among the stakeholders and
landlords’ participants in the villages are closely related to the
success of redevelopment.
2.4 Analytical Framework
Giving the close relationship among the stakeholders, which are
government, developers, and landlords presented above, the
analytical framework, as illustrated in the figure below, will
focus on all three components in this research. The purpose is to
collaborate all the participants in order to redevelop the urban

villages situation in China. The framework will be used to
examining what measures have been implemented by
government, landlords, developers in Shenzhen refers to
redevelopment, by looking at the government policies and
market forces. In addiction, landlords’ participation and rural
migrants resettlement are also considered in the following case
study.
Figure 2: The analytical framework
The right of Policy
constitution
Government

Welfare /
Compensation
Preferential
Policy
Landlords
Developer
Payment /
Compensation
The right of
Agreement
The right of
Development
(Source: Author)
Although all these concepts have been research independently,
in terms of demolition-development, mostly successful case is
link between governments, developers and landlords. In this
case, the government compiles the urban villages redevelopment
plan according to the modern urban planning concept and
method, should be formulates the policy rules, and researches
and promulgates the urban renewal regulation. The
government's goal of urban village reconstruction is to get
public space land, improve roads and infrastructure, create a
modern urban space, and form a middle-class social structure in
10-15 years. After the completion of the urban village
redevelopment, the land is state-owned, and the land real estate
value added space is given, which provides incentives for
residents to increase their asset value and income, and also

provides profit space for market operation.
As the market operator of urban village redevelopment, the
profits is the basic target, but they can also seen as the new
investment. The landlords should contribute a certain proportion
of public space land and financing land to reduce the
compensation area based on the recognition of planning
schemes and compensation methods. After the reconstruction,
due to the substantial improvement of infrastructure and
development environment, the price of land and housing will
rise significantly, and the villages and the total assets of
villagers will get attractive appreciation space.
Rural migrants are a group that is often ignored. Instead of
driving rural migrant out permanently and violent demolition,
providing legal sustainable rental housing. At same time,
provide the proper rights to protect them live in house and
become a legal resident of the community.
Methodology

3. CASE STUDY
3.1 The City Profile:
Shenzhen is the first Special Economic Zone (SEZ), and it lies
in Guangdong Province in China. The city is located in the
northern Hong Kong, the former British colony. Meanwhile, it
is in the south of Guangdong province. Because of its special
geographic and economic location, it become the foregoer of
China's Reform and Opening up and the experimental field of
‘socialist market economy’ (Lai and Zhang, 2016).
Since the open door policy in late 1978, approximate 30 years
period, Shenzhen was no longer the small native village. The
population was two thousand, to a 21st century metropolis
housing over 10 million people in 2016. The official census
shows that it has an extended resident population of 8 million
900 thousand and a floating population of about 2 million.

There are 2.3 million people registering in Shenzhen among the
8.9 million extended residents, with the rest coming from other
cities in China. (Wang, 2013). Gross Domestic Product (GDP)
of Shenzhen has been ranked in the third position throughout
Chinese cities in recent decades, only lagging behind Beijing
and Shanghai. In 2017, Shenzhen surpasses 2.2 trillion Yuan
(US$338 billion) in GDP and mark with 8.8 per cent economic
growth (He, 2018).
3.2 The history of Shenzhen’s urban villages:
This rapid transformation was seemed as a miracle during the
world urban development history. However, there are
irregularities in the urban sprawl, urban villages is a special
phenomenon. The evolution of villages in Shenzhen can be
divided into four stages. (Hao, et al, 2011).
At the initial development of Shenzhen in 1980s, basically was
in view of the investors at domestic and abroad. Favorable
policies, less expensive land and labor attract investors from
mainland cities, Hong Kong and other countries all over the
world. At that time, the law still stopped the transaction of land.
The government tended to lease land to foreign-owned
enterprises for development or use money from investors to
build factories. At same time, in order to construct the urban
economic expansion, there is no expropriation of all rural land.
Only the newly developed land was recovered at a low price,
and the village is still a residential area. (Hao, et al, 2011). The
practice of land expropriation in the special zone caused
psychological panic among the villagers and triggered the first
round of building boom.
City areas began to develop on the rural land, villages in those
places were gradually encircled by urban areas. In 1987, the
National Land Reform initiated in Shenzhen, transformed urban
land use into a marketable commodity (Wang, et al, 2009). The
policy started to stimulate the real estate market, letting the
villages have further development. At same time, the
government has commandeered a lot of rural land, and there was
no land for local farmers to grow. (Hao, et al, 2011). The new

urban constructions and emerging industries attracted migrant
works to the city, and increased the demand for affordable
housing. As a consequence, local villagers started to build
personal informal settlements, using for living-source. To sum
up, the excessive pursuit of investment drives economic growth,
and because of the ineffectiveness of government regulations,
the large amount of urban villages has emergence.
Beginning in 1992 and ending in 1998, the period was vital for
the development of villages in Shenzhen (Hao, et al, 2011). The
government of Shenzhen has decided to "urbanization" in the
rural areas and villages in the special economy zone in 1992.
Original resides’ ‘Hukou’ status were formally from countryside
to urban citizens. The production team (rural economy) was
transformed into a joint-stock company, and the village
residents change to shareholders. Conversion of collective
owned land changed into state-owned land. (Wang, et al, 2009).
In 1993, the two county Bao’an and Longgang had both changed
into district. Therefore, the villages in these two areas were
officially changed into urban villages. After that, the spatial
structure of villages in Shenzhen has been started.
The final stage starts at 1999. In the past thirty years, the
process of urbanization in China has gone through a period of
fast growth. Shenzhen has entered in the limit place of
urbanization because there is no newly developed land. (Wang,
2013). In 2004, the government expanded areas outside the SEZ,
including the suburbs. Until 2004, “all collective-owned lands
in Shenzhen are required to be transferred into state-owned
land” (Tong, et al, 2018). The staff of Planning Bureau said that
a “shortage of land is considered as the largest restriction for
the future urban growth in developing city.” Limited urban land
stock can explain that state and regional regulation transfer is
related to land, land tax and development strategies. In
particular, in the special economic zones, there are no more
open spaces to build new buildings. In this context, local
governments must adjust the internal structure of the city,
which is often emphasized in the municipal agenda. Therefore,

there is reason to believe that a new redevelopment strategy is
coming.
3.3 The characteristics of urban village in Shenzhen:
Due to the advanced economy and high rental income, the urban
villages in Shenzhen have some unique characteristics.
First, the number and the scale of illegal buildings are large,
and the growth is rapid (Yin, et al, 2009). According to the
statistics of Shenzhen Municipal Government, at present, there
are more than 300,000 private houses in urban villages inside
and outside the Shenzhen Special Economic Zone, and there are
over 2 million rental houses. If one house covers 100 square
meters and the average five floors are calculated, the floor area
of 300,000 private houses in urban villages will be more than
150 million square meters and each person will live 10 square
meters. The actual population may be more than 8 million,
excluding the houses that are occupied by landlords and empty.
Secondly, the building density is high, the floor is high, and the
floor area ratio is high (Yin, et al, 2009). At present, Shenzhen,
especially inside the SEZ, the building density is generally
high. Some villages have a construction rate of more than 90%,
with an average of 7-8 floors, even have 15 floors or more, and
the floor area ratio even reach to 6, which is much higher than
the 40% building density specified in the Shenzhen Urban
Planning Standards and Guidelines, and the floor area ratio is
2.1 (Lv and Zhou, 2006).
The third is that there is a great profit. At present, the average
rent per square meter of rented houses inside the SEZ is about
18-25 Yuan (Research group of Shenzhen Academy of Social
Sciences, 2004). The rent of a 700-square-meter is around
13,000 Yuan per month and the owners will earn 150,000 a
year. If the private house is close to the main street, the rent of
the first-floor shop is several times than the rent of the private
house, and the total income of one-year rent can reach more
than 200,000 Yuan. The cost of building a 700-800 square
meters settlement is around 400,000 to 500,000 Yuan, which
means they can get cost recovery in three to 5 years.

The paper will illustrate two urban villages in Shenzhen and
examines how formal and informal intuitions help and deter
regime building in the course of redevelopment. Yunong
Village, and Gangxia Village have received wide attention in
discussions on Shenzhen’s urban village redevelopment.
3.4 Yunong Village Case:
Yunong Village lies at the the edge of Huanggang Checkpoint,
next to the Shenzhen River, with proximity the close to Hong
Kong as the villages. Because of its special geographic location,
it became the first "village" in Shenzhen to be demolished and
rebuilt. It acts as a successful redevelopment case in the history
of urban village redevelopment in China. It occupied 20,000 m2
and had 9,000 residents. In these 9,000 residents, there are only
200 original villagers (about 76 households) with legal land
ownership, and the others are peoples from outside the village
search for investment lease income (Li and Li, 2011).
In 1988, for the first time, the policy on Punishing Illegal Land
Use and Land Registration showed that land property rights in
urban villages are owned by state and only villagers can use
instead of lease or transfer (Shenzhen Municipal Government
Website, 2016). In 1999, the Futian government further
launched a policy explicitly prohibiting the leasing of properties
to people who are not villagers and announced to clear all
illegal settlements (Li and Li, 2011). However, this policy
threatened the economic sources of the villages since the rental
housing is not allowed.
After the strict policy, the conflicts between the government
and village start to arise. Due to the fluke mind, if the
government seriously considers redevelopment, the
compensation would be increase as much larger building areas.
Thus, villagers under the guidance of VJVE (VJVE is short for
village joint venture enterprise) started to quick replace the low
storied building with high-rise buildings. So the Futian
government has taken an unusually hard line by sending police
to block construction sites and cut off water and electricity for
the new buildings. But VJVE didn’t concede. The main reason

is that the final compensation will be directly related to the
construction area. both legal and illegal. In order to resolve
these problems, Futian government resolved to move away from
authority to adopt the cooperative way of cooperation with
VJVE (Li and Li, 2011).
A private actor sector, Gemdale Corporation, joined the alliance
in Yunong case on October 27, 2004. The government has
worked with developers to draft a carefully prepared document
by explaining potential gains to landlords, which initially
reached a tri-partner cooperation agreement. Further efforts
were made in resettlement and compensation arrangements. One
of the main attractions of the relocation plan is the commitment
of the land agent to move back to the apartment. The Futian
government also deployed some workers in the village to deal
with this problem. In particular, they worked closely with
VJVE, which had a major influence on the final decision of all
villagers. (Li and Li, 2011). Eventually, the developer act as
more active and engaged character in this redevelopment plan.
According to Li and Li (2015), “Gemdale held frequent
discussions with villagers on the redevelopment details, such as
the amount of commercial and residential floor areas to be
returned to the villagers and the VJVE; location and orientation
of buildings; housing type; decoration standard; and even the
number of parking lots”. Based on the agreements, after the
reconstruction is completed, the village would have the nine
high-rise buildings with thirty-three floors, and some retail
stores would be placed on the first floor. In addiction, five of
the nine buildings on the eastern will be moved back to the
landowners, or totaling one hundred thousand and four hundreds
square meters, which include business and residential areas.
In order to help the developer to compensate this redevelopment
plan, the local government reduced the ratio of floor area and
site area from 5.8 to 6.82, which means the real estate agent can
make more buildings. In addiction, Futian government waived a
$20 million land price and halved the developer’s transaction
tax in order to show their support and eagerness (Li and Li,

2011). The project was completed in 2008 and landowners
started to move in new apartment, while the real estate company
can sell its portion of the project. The most successful element
is the authority cleaned up a crowed urban village with minimal
financial and political costs.
Figure 3: Site clearance of Yunong Village
(Source: Li and Li, 2011)
3.5 Gangxia Case:
The Gangxia case has always been termed as a failure. The
government had the intention of trying to bring the success of
redeveloping the urban village by using the same strategy that
was used in the case of Yunong (Li and Li, 2011). However,
this time around the strategy proved not to work as effective as
it was supposed to.
Gangxia is located in the southeast area of Futian District,
divided into two parts: Heyuan Area and Louyuan Area by a
street. According to Tan and Shima (2017), the area is bout
151,600 m2, and the total existing population of Heyuan Area is
about 68,000 people, including the local population of 1,153
people, foreign population of 843 people and temporary
population of 66,000 people. After Shenzhen government
published a policy “On the Shenzhen Special Economic Zone of
rural urbanization of the Interim Provisions” in 1992, the city
government tried to develop Heyuan Area as the central area of
Shenzhen Central Business District (CBD), business supporting
functional areas which would provide service for financial,
business, information, culture, exhibition and other industries in
public central area (Cheng, 2003).
Figure 4: The location of Gangxia Village in Shenzhen from
Google Map
(Source: Google Map, 2017)
In this case, the initial three partners were identified within the
village, the government, the developers, and the VJVE.
However, this time the government tried to bypass other people,

only to cooperate with the president of VJVE, who was elected
with the support of the authorities. As a result, the guidelines
agreement signed among VJVE, the government and developers,
was blamed by the villagers for being unrepresentative and
ineffective. (Li and Li, 2011). Despite the growing conflict of
interest among the three parties, the government has succeeded
in trying to remove structural barriers with armed forces.
Organized protect emerged and the whole redevelopment project
started slowly. In the end, although the villagers eventually
agreed to give up ownership of the households, they were
reluctant to do so. Because villagers believe that if they
continue to refuse compensation, the economic downturn will
hurt them more.
4. DISCUSSIONS AND ANALYSIS

As emphasized by the case study, we can find that urban
villager redevelopment is a complex multi-interests game
process, and a collaborative partnership among all stakeholders
is the keys to successful urban village redevelopment. The
Yunong case shows a collaborative network based on trust and
support, while all stakeholders are working together towards
one gorals. On the other hand, lack of understanding and
collaboration caused the negative outcome.
4.1 Government:
Through the case study, it becomes apparent that most of
successful redevelopment projects are government led, the role
of government in China have proven to be more effective on
redevelopment of urban villages. However, the degree of same
local authority involvement that led to two different outcomes.
The current practice of urban villages redevelopment in
Shenzhen is to adopt different modes for different types of
"urban villages", based on the current villages status, main
problems, market potential and the relationship with urban
planning. The basic mode of redevelopment is "state-led,
market-oriented operation", and this is one of the reasons why
the government have a direct impact on the developers and
landowners in Shenzhen. As seen in the case of Shenzhen,
government carries out macro-control and guidance through
policies and plans, as a mediator role during the cooperation
process, which can directly affect the success of redevelopment.
Policy Maker: A feasible policy has an impact on the
redevelopment. In the case of Shenzhen, the government has
published several specific policies and plans to tackle urban
village problems. The main local policies include: The
Thirteenth Five-Year Plan of Shenzhen, The Master Plan of
Shenzhen Villages-in-the-City Redevelopment, Current
Construction Plan of Shenzhen, Special Project Plan for
Village-in-the-city Redevelopment, and land use zoning as
stipulated in District-Level Layout Plan (Chung, 2009).
Typically, the Redevelopment Master Plan is a strategic policy
that specifies the direction and planning principles of urban

villages redevelopment.
From the eleventh Five Year plan of Shenzhen, it also
constituted the potential redevelopment sequences after
researching the negative impacts on urban development. This
plan classified urban villages into five categories (see Figure 5).
The blue polygene represents the redevelopment program should
be finalized during the five years. The villages’ redevelopment
speed should be accelerated are filled by mauve color. Orange
means the redevelopment project should be launched within the
five year. And the other two categories are to be researched and
to be conversed respectively. In Futian district, the
redevelopment sequences included to be finalized, to be
accelerated and to be launched. This can be seemed as three
redevelopment sequences (stages).
Figure 5: The plan of urban village redevelopment within five
years (2005-2010)
(Source: Shenzhen Municipal Government, 2005)
Yunong Village still stands out as an excellent example of what
the policies of the government can do when it comes to the
aspect of redeveloping the urban villages. The village was
demolished to its entity and reconstructed to meet the set
guidelines and city government plans. Yunong has the same
policies as other state and city governments in China. However,
the city government gives a room for partnership in some areas.
In 1999, the city government prohibited the act of leasing land
in Yunong to people who were non-villagers. The reason for
doing so was because the investors from outside had seen the
potential of the city and they were ready to invade the area and
invest as much as they could. The actions of the foreign
investors did not come without consequences. When it gets to
the point where the government restricts the leasing of the land
to specific persons, it is evident that the policy has the power to
dictate what happens on the land. The investors who were
restricted from buying the land in Yunong had the plans of
coming up with building plans that continued to promote the

rise of urban villages. However, because of the policy that
restricted the lease of the land, they were not able to acquire the
land. Development of land and leasing of land are associated at
a higher level.
In the redevelopment plan, residential and commercial land use
is separated and villagers can engage in economic endeavors by
sharing the future commercial land use. Also, the historic
buildings such as ancestor halls and watchtowers in village will
be preserved. With such strong support from the government,
the VJVE and villagers were more engaged into the project.
In addiction, according to the Special Project Plan for Village-
in-the-city Redevelopment, the government can provide
preferential policies to developers in order to attract them to
invest the redevelopment projects (Shenzhen Municipal
Government, 2016). In Yunong’s case, Futian government
waived a $20 million land price and halved the developer’s
transaction tax in Yunong Village. Therefore, it is no doubt that
the policies are affecting the shareholders and also promoting
the redevelopment of the urban villages.
Coordinator: In the cases, we note that the alliance shows a
network of government authorities and the private sector, which
is further separated into landlords and private developers (third
parties emerged in Gangxia, mainly as financial resource
providers), who had the resources and expertise to complete the
reconstruction project. The Gangxia case has always been
termed as a failure because the government should play the role
of coordinator in the urban village redevelopment, and should
not only represent the interests of one party.
The contradictions and disputes between VJVE and landowners
during the redevelopment process need a platform for
communication, and the balance of interest relationship can be
achieved through the coordination and communication skills of
the government. In these two cases, the government began to
take a hard line when trying to rebuild the village in the city.
The government in the Yunong case quickly drew back, because
they realized that it was not feasible. This change of power

alliance paved the way for the end of success. Such patience
and diplomacy have not been found in the case of Gangxia. The
government lacks the ability to communication and dispute
resolution, so each party seeks to maximize its own interests.
The negative consequences of maximum profits seeking by each
actor in the coalition worsen when villagers themselves are
dragged into their own skirmishes leading to fighting. From this
point of view, the power structure in the alliance is completely
distorted and almost impossible to find a balance.
The case studies suggest that strong government involvement
was a necessity for getting planning approvals, resolving
disagreements, and facilitating the whole process. Different
from the western experience, the redevelopment of urban village
in China cannot proceed successfully without the active
involvement of government. In the light of “state-led”,
government is the major force to drive the redevelopment and
manage the process.
4.2 Developer:
4.3 VJVE/Landlords: Accept and Support the redevelopment
Although the Shenzhen government has made redevelopment
schemes for the two urban villages in a top-down way, the
smooth and strong support from landlords can play a vital role
in making the successful redevelopment plan. For the Village
Joint Venture Enterprise (VJVE), they not only have the
responsibility to negotiate with government and developers, but
also have the power to formulate a redevelopment plan that
meets the various needs of villagers. For the villagers, they
have the opportunity to express their ideas to the VJVE. Thus,
the relation between the VJVE and villagers is a critical factor
that decides whether the redevelopment plan can meet various
needs of the villagers or not.
It’s worthwhile to mention that the VJVE of Yunong Village has
fully taken the villager’s needs into consideration. Knowing that
most villagers may rely on the rental incomes after
redevelopment, the VJVE requested 5 out of 9 buildings with 33

floors or a total of 100,400 m2, so that most villagers can
receive more than one unit and rent them to outsiders. From the
local newspaper interviews, all the interviewees (landlords)
agreed that their living conditions were improved significantly.
Some of the villagers even became billionaires after the
compensation as they received large area of apartments.
The case studies has shown that urban villagers have a strong
desire to gain more control over their lives and are more willing
to fight for their benefits, compensations, and legal rights.
Compensation is one of the most important factors that decide
whether the redevelopment is feasible or not. Generally
speaking, there are two steps for making the compensation
scheme. For one thing, the VJVE needs to gather villagers’
opinions to formulate a scheme that endorsed by at least 80% of
all villagers (Chung and Zhou, 2011). For the other, the VJVE
has to negotiate with the government and developer to get the
compensation scheme approved. Thus, the relations between the
VJVE and the villagers and the negotiation power dynamic
among the VJVE, the government and developer are two aspects
that have great influence on the compensation schemes.
In terms of Gangxia Village, there were many disagreements
between the VJVE and the villagers when making the plan. It is
obvious that the distrust between the villagers and the VJVE is
critical. The situation of Gangxia Village was that the villagers
wanted more compensation, but this request was not supported
by the government and developers.
Redevelopment schemes at the implementation level must
follow the objectives put forward in the Current Construction
Plan of Shenzhen (2006–2010) and land use zoning as stipulated
in District-Level Layout Plan (Figure Below), two subsidiary
legal documents of the Shenzhen City Master Plan (1996 –

2010). These plans have created a network of prescriptions from
the strategic to the operational levels to regulate the future
development of villages-in-the-city — making them no longer
‘spaces of disorder’
How the government’s policies do to impact the stakeholders
and directly influence the redevelopment
Master plan-sources

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