Posted: May 12th, 2022

Discussion and Analysis Paper

Discussion and Analysis Paper

Prepare a 1600 words ” Discussion and Analysis “chapter.
The requirement and the paper background are already uploaded as file

Please read the following essay and you should write a dissertation chapter under the “Discussion and Analysis”, which I already wrote a paragraph. The dissertation is about “redevelopment of urban villages in China”.

You suppose to analysis the case study (I highlighted as purple) and discuss how government policies do to impact the stakeholders and directly influence the redevelopment of urban villages in China or you can write how stakeholders should do to impact the redevelopment of urban villages.

Words limits: 1600 words (You don’t have to write introduction since it’s a chapter)

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 National Bureau of Statistics of 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 massive rural migrants, who look for jobs 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, can be defining as the village in the middle of the city, interact as urban expansion surrounded them (Chung, 2009).

According to land management law in China, urban land owned by state, and rural land is collective-owed by the village. In addiction, 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, the rental markets in China can be divided into three categories: revolving housing provided by the government; commercial houses in the third-tier market; and rental 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. In China’s urban transition, while the government neglects the livelihood of the two most vulnerable groups: the landless peasants and the rural migrant workers. Urban Villages have undeniably contributed a positive environment to alleviating the problems of the unemployment of the former and the accommodation 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 are not competitive in the urban labour market. 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 Chinese model of governance is highly top-down. Legislative power for planning is located at both central and provincial levels. In February 2016, the Chinese central government released 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”, in which it is stated that ‘by 2020, the transformation and renovation of existing shantytowns, urban villages and dilapidated houses in cities will be complete (Liu, 2017). The city level has limited authority for setting up regulations and implementing rules in the city-wide plan. However, policies aims to support the redevelopment are specific for each city. Thus, 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.

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 in English on urban villages in China is rare (Yeh, 2005). Mainstream academic and policy researchers in China have focused on the role of urban villages 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). Thus, 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.

Growth coalition in redevelopment project:

The redevelopment of urban villages is a complex process, which 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, compete for their own benefit 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).

Government: Government is major force in urban village redevelopment. For the government, urban villages are perceived as ‘more of an urban governance problem than a socio-economic phenomenon’ (Hao et al, 2011). They believe the redevelopment can bring economic benefits, infrastructure improvements and elimination of social problems, 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 (2011) found that China’s local governments are more powerful and active than their counterparts in western countries, which allows them to play a more dominant role in the power coalition.

Developer: The 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 tend to have two structures: first was formed under the public-private cooperation, which the government makes investments with the private sector and was the dominate model during the early market reformation in the 1970s-1980s, the state provides the urban planning policy and land-use control framework, while the private developers operate it. Second is solely private model and often involves collaboration between international and domestic investor, it is the majority of development company in the current market. However, public authority still involved in the initial state. Sometimes, the public authority may even absorb the role of the developer and carry out a ‘top-down’ redevelopment approach in the form of a redevelopment corporation with the benefit of exemption from planning and other regulatory controls that would normally constrain a private developer (Li, 2015).

Landlords: Rent is one of the main income resources for the majority indigenous residents. Urban village redevelopment means for most of them to lose their living incomes. Thus, compensation negotiation becomes a vital process. Since the rental price would definitely impact by surround infrastructure improvements and environments, landlords are tending to hesitant to trade their property in order to get long-term 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 unacceptable for landlords, it is hard to convince them to support the redevelopment project.

In addition, each villages-in-the-city has its own shareholding company, which represent the ‘collective interest’ of indigenous villagers and play an active role in all activities related to the village. Claiming the ownership of land in their villages, shareholding companies usually have a large reserve of cash from rents and management fees collected in the village. This financial power has enabled shareholding companies to negotiate with government authorities during redevelopment process as they could use their own resources to facilitate development/redevelopment (Chung 2009).

In the urban village redevelopment process, the three main entities, the local government, indigenous residents 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 reconstruction projects, such as conservation projects, do not have the potential to attract developers. So the government must invest by themselves. Sometimes, if the original peasants have strong economic supports, they will take the initiative to undertake redevelopment funds, such as renovation projects or maintenance projects (Zhao, 2005).

In addiction, local state and developers are usually perceived as sharing the goal of smoothing operations and preventing disputes in inner-city redevelopment. Communities and individuals are against these potentially colluding parties to empower themselves because community organizations are excluded from urban (re)development (Cheng, 2012). Only when all parties are satisfied with their share of the benefits will the redevelopment be accomplished (Zhuang, 2014).

Methods of urban villages redevelopment:

According to different redevelopment subjects, 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. The second type is developer dominance, with high efficiency and low government transaction costs. The disadvantage is “being picky”. As a result, the most difficult parts are kept, and the lack of public space and rent seeking are also serious. It leads to the dual crisis of social contradictions and government governance. 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 (Ye, 2015).

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.

In other way, according to construction methods, there are 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 upgrading will include the refurbishment and also improvement of the existing structures. This includes improving the infrastructure, having historical and cultural construction, waste management lines should be properly put in place and also 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).

According to Wang (2017), there are different strategies that can be used to regenerate urban villages. One is involving the communities in the planning process so that they are able to understand the whole process of refurbishments. This will allow the residents to point out where they feel the social amenities should be placed. It will also give the community a chance to invest in the development project. They will also raise suggestions on which parts of the villages should be for residential purposes and also to suggest the collective charges that should be placed for residential and also other facilities such as hotels and business rental houses.

The government should also consider financing the redevelopment projects through debts where development corporations take loans from banks to develop the villages, in turn, the landlords and landowners pay the loans after the new buildings have been established and they have been put in their hands. Another factor the government can consider is 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.

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.

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. 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.

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 and rural migrants 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.

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

Case Study

The City Profile:

Shenzhen, as the first Special Economic Zone (SEZ), is located at Guangdong Province in China. The city is lying the north of the former British colony, Hong Kong, and in southern Guangdong province. Because of its special geographic and economic location, it become a pioneer of China’s Reform and Opening-up and experimental ground of the country’s ‘socialist’s market economy’ (Lai and Zhang, 2016).

Since the open door policy in late 1978, approximate 30 years period, Shenzhen has transformed from a small native village with population size of two thousand, to a 21st century metropolis housing over 10 million people in 2016. The official government census puts Shenzhen’s total long-term residential population as 8.9 million and the floating population to be around 2 million. Out of the 8.9 million long-term residents, only 2.3 million have Shenzhen Hukou and the rest have proper urban Hukou registration from other Chinese cities (Wang, 2013). Gross Domestic Product (GDP) of Shenzhen city 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).

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 Shenzhen’s urban village can be subdivided into the following four phrases.

At the initial development of Shenzhen in 1980s, basically was based on the engaging domestic and foreign investors. Preferential policies, cheap land and labor force attracted investors from Mainland Chinese cities, Hong Kong and other countries. Because the law at time still prevented the buying and selling of land, the government tend to lease land to foreign-owned enterprises for development or utilized foreign funds to set up factories. At same time, in order to construct the urban economic expansion, instead of expropriating all the rural land, only the fields were expropriated at a low price for new development and the village settlements remained as residential quarters (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.

Urban areas started to develop on the rural land, villages in those areas were gradually encircled by urban areas. In 1987, the national land reform, which was initiated in Shenzhen, turned urban land use into a commodity that could be traded on the market. The policy started to stimulate the real estate market, and driving the urban village to develop further. At same time, the government expropriated a large quantity of rural land, there is no land available for local farmers to plant. The new urban constructions and emerging industries attracted migrant works to the city, and increase the demand for affordable housing. As a consequence, local villagers started to build large-scale private informal settlements as a new form of living-source. In summary, due to the excessive pursuit of investment-driven economic growth and ineffectiveness of government regulations, the large amount of urban villages has emergence.

From 1992 to 1998 was an important stage for urban villages’ development in Shenzhen. In 1992, Shenzhen government decided to ‘urbanize’ rural areas and villages inside the SEZ. Original resides’ “Hukou” status were formally changed from agricultural to urban citizens. Production teams (the rural economic bodies) were reformed into shareholding companies and village residents became shareholders. All the collective land was transformed into state-owned land (Wang, et al, 2009). In 1993, Bao’an and Longgang transformed from a county to district, so the villages in these two districts were formally been transformed to urban villages. Since then, the spatial pattern of urban villages in Shenzhen has been formed.

The last phase has been counted since 1999. The urbanization process has gone through a period of rapid growth in the past thirty years. Shenzhen has reached its limits of urbanization as there is no land left for the new development. In 2004, the government expanded the area to include the suburban districts, outside the original SEZ. By 2004, “all collective-owned lands in Shenzhen are required to be transferred into state-owned land” (Tong, et al, 2018). A planner from Planning Bureau indicated that a “shortage of land is considered as the largest restriction for the future urban growth in developing city.” The limited stock of urban land is one of the reasons for the national and regional regulation shifting related to land, land taxing and development strategy. 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.

The characteristics of urban village in Shenzhen: (Data)

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. According to the statistics of relevant departments, 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. 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.

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. 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.

Yunong Village Case:

Yunong Village is located on the edge of Huanggang Checkpoint and is near Shenzhen River, with proximity the close to Hong Kong as the villages. Due to its particularity in geographic location, it became the first “village” in Shenzhen to be overall demolition and reconstructed and acts as a successful redevelopment case in the history of urban villages in China. Yunong Village occupied 20,000 m2 and a population of 9000. Among this population, there are only 200 original villagers (about 76 households) with legal land ownership, and the rest are owners from outside the village looking for investment lease income (Li and Li, 2011).

In 1988, the city government launched a policy on retribution of illegal land use and land registration, which is the first time, stipulates that property rights over land in urban villages are state owned, villagers only have the right to use instead of lease or transfer. In 1999, the Futian authority further issued a policy statement with a clearly spelled prohibition on the leasing of properties to non-villagers, and announced to clear all illegal settlements However, this policy threatened the economic sources of the villages since the rental housing is not allowed (Li and Li, 2011).

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