Conclusion part

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