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2013 50: 1919 originally published online 26 November 2012Urban StudFulong Wu, Fangzhu Zhang and Chris Webster

Peri-urban AreaInformality and the Development and Demolition of Urban Villages in the Chinese

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Informality and the Development andDemolition of Urban Villages in theChinese Peri-urban Area

Fulong Wu, Fangzhu Zhang and Chris Webster

[Paper first received, February 2011; in final form, August 2012]

Abstract

The fate of Chinese urban villages (chengzhongcun) has recently attracted bothresearch and policy attention. Two important unaddressed questions are: what arethe sources of informality in otherwise orderly Chinese cities; and, will village rede-velopment policy eliminate informality in the Chinese city? Reflecting on the long-established study of informal settlements and recent research on informality, it isargued that the informality in China has been created by the dual urban–rural landmarket and land management system and by an underprovision of migrant housing.The redevelopment of chengzhongcun is an attempt to eliminate this informality andto create more governable spaces through formal land development; but since it failsto tackle the root demand for unregulated living and working space, village redeve-lopment only leads to the replication of informality in more remote rural villages, inother urban neighbourhoods and, to some extent, in the redevelopedneighbourhoods.

1. Introduction

China has experienced rapid urbanisation inthe past three decades, its urbanisation levelincreasing from about 19 per cent in 1979 to46.6 per cent in 2008 (CNSB, 2009). Ruralto urban migration is mainly concentratedin the eastern coastal area (Fan, 2008),

especially in the peri-urban areas of largemetropolises (Wu, 2002; Wang et al., 2010).To what extent can the development ofChinese cities be understood with referenceto the global South (Roy and AlSayyad,2004), especially the notion of the ‘planet of

Fulong Wu and Fangzhu Zhang are in the Bartlett School of Planning, University College London,22 Gordon Street, London, WC1H 0BQ, UK. E-mail: [email protected] [email protected].

Chris Webster is in the School of City and Regional Planning, University of Cardiff, GlamorganBuilding, King Edward VII Avenue, Cardiff, CF10 3WA, UK. E-mail: [email protected].

Urban Studies at 50

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slums’ attributed to a world of globalisingcapitalism (Davis, 2006)?

Despite extensive studies of China’s ruralto urban migration, only recently havethere been substantial published accountsof the habitat of migrants (Tian, 2008;Wang et al., 2010; Liu et al., 2010). Earlierstudies of migrants largely focused on theirsocial structure and their exclusion fromthe labour market (Solinger, 1999; Zhang,2001) rather than their living spaces. Fromstudies of migrant housing, we know thatrural migrants tend to live in peri-urbanlocations due to a shortage of private rentalspace inside Chinese cities (Wang et al2010; Wu, 2002). In some cities such asShanghai, the distribution of rural migrantsis more dispersed, including to old munici-pal and work-unit housing areas, while inothers such as Guangzhou and Shenzhenthey are concentrated in chengzhongcun, theso-called villages in the city (Tian, 2008).

The purpose of this paper is to use theperspective of recent informality researchto trace the source of informality in thecontext of Chinese cities and criticallyexamine recent policies of village demoli-tion in China. This study aims to compareurban informality in different Chinese citiesas well as with other countries and hencechallenge the official discourse of informaland disorderly villages which it is deemednecessary to demolish. The research iscentred upon the understanding thatinformality is created by the political eco-nomic institution that defines the develop-ment process and management of informalsettlements. In the following section, theliterature of informal settlements andinformality is reviewed. Section 3 then pro-poses a framework for analysing informalityin human settlements. Section 4 explainsthe persistence of informality after landacquisition. Section 5 examines in detailthree cases of village redevelopment. Thepaper concludes by critically considering

implications for informality research inChina and elsewhere.

2. Property Rights, ‘Informality’ and‘Informal Settlements’

There has been extensive research on infor-mal settlements in the field of developmentstudies over many years (Gilbert and Ward,1985; Gilbert, 2007; Gilbert and Gugler,1992; UN-Habitat, 2003; Varley, 2002; vanGelder, 2009). There is particularly goodcoverage of Latin American (Gilbert andWard, 1985), South Asian (Nijman, 2010),Hong Kong (Smart, 2006) and African cities(Huchzermeyer, 2003). At the heart of thenotion of the ‘informality’ of settlements isthe issue of property rights over land inhab-ited by the poor and low incomed. The liter-ature exposes tremendous diversity withinthe category of informal housing (also seePayne, 2004 for a comparative discussion).While ‘squatter settlements’ usually meanthat housing development and occupationhave occurred without the formal consentof the landowner, other rights over thesquatted land or building might be legal. Intheir study of three Latin American cities,Gilbert and Ward emphasise the diversityacross Valencia, Bogota and Mexico City,for example. They found that

the poor acquire land principally through

illegal processes but the form of this illegality

varies considerably between settlements and

between cities (Gilbert and Ward, 1985, p.

127).

In Valencia, it has been invasions of publicand private land that have created informalsettlements; while in Bogota, informalneighbourhoods have been widely built on‘pirate sub-divisions’ of legally acquiredland owned by rural elites and let or sold tomigrants outside the formal development

1920 FULONG WU ET AL.

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process. In Mexico City, illegal sub-divisionhas been the major form of informal neigh-bourhood expansion; but for short periodsthere have been land invasions. The firstdistinction to make, therefore, in under-standing the idea of settlement informality,is between the legality of land developmentand legality of ownership. This proves to becrucial, as we shall show, in understandingChina’s version of the informal settlement,since the extent of self-built multistorey‘illegal’ development in the chengzhongcunof southern China suggests a high degree ofcontractual security (Zhao and Webster,2011). We suggest that it is the relativestrength of sanctions in different legaldomains that determines the nature of acountry’s informal settlements. Weakdevelopment control laws and strongformal or customary laws of contract maybe consistent with an efficient ‘informal’land market.

The legal domains governing the emer-gence of informal settlements go beyond thelaws governing primary land developmentand exchange of newly built property, how-ever. Property rights over land are divisibleand tend to fragment as land values increase(Webster and Lai, 2003). An agriculturalfield under single ownership may be soldand sub-divided into multiple house plotsand any one of these plots sub-divided againinto a 10-floor building—as is typical in thechengzhongcun of Guangdong province, forexample (Zhao and Webster, 2011). Whatultimately defines an ‘informal’ settlementwhen property rights are viewed, in this way,as separable rights over a property’s multipleattributes? The answer is that the definitionshould be purpose-specific. If the issue atstake is sub-standard and undersuppliedinfrastructure, then we should be interestedin settlements built without land develop-ment and building control permits. If theissue is space and public health of tenants,then the interest will be in rental markets

operating outside public health and rentallaws. If the problem is lack of capital, thefocus might be on legal title.

One of the problems with the studies ofinformal housing in the past has been thelack of nuance in this respect and the appli-cation of overgeneralised diagnosis and pre-scription and confused debate. Kiddle(2010) notes two seminal authors (Turnerand de Soto) who have shaped this debate,both of whom make certain assumptionsabout the efficiency of existing propertyrights allocations in informal settlements.Based on fieldwork in Peru, Turner (1976)argued that squatter settlements provided‘self-help housing’ to the poor who cannotafford formal housing. Depending uponinformal labour markets, the poor cannotafford to travel long distances and have tolive near their informal jobs to reducetransport costs and time. Turner’s emphasison the positive function of squatter housingled to a widespread reversal of earlier poli-cies of demolition and slum resettlement,which were widely replaced in the 1970sand 1980s with in situ squatter upgrading(Pugh, 2000).

Hernando de Soto (2000) argued thatthe poor in the developing world possessvaluable assets that cannot be transactedbecause of the lack of legal property rights.He insisted that an absence of legally pro-tected private property hinders capital for-mation among the poor because it reducesan incentive to save and invest and lowersaccess to borrowing. The policy implicationof his research is advocacy of the legalisa-tion of land titles through land titlingprogrammes—an approach supported bythe World Bank (van Gelder, 2009; Mooyaand Cloete, 2007).

De Soto’s analysis and message have beencriticised on various grounds. In developingcountries, land sales are common withoutformal title (Gilbert, 2002); and there aresocial practices that recognise de facto

INFORMALITY AND VILLAGE CHANGE IN CHINA 1921



property rights, sometimes rendering ‘infor-mal’ agreements stronger than those madeunder formal laws (Varley, 2002; Musembi,2007). Gonzalez (2009) criticises de Soto’stenure regularisation as a panacea, notingthat it has been used by liberal governmentsas a way of avoiding problems that cannotbe solved by tenure policy. Varley (2002)warns that incorporating informal housinginto the formal market can disrupt commu-nity life and lead to forced relocationthrough gentrification.

Many of the problems addressed in suchdebates are resolved by understanding thedivisible nature of property rights. As wehave said, property rights over a resourcemay be divided between multiple owners,the fragmentation being limited only by thetechnical and legal possibility of creatingexclusive ownership and the existence ofspecialists with the appropriate knowledgeto assume ownership of a specialised right.De Soto’s leverage point, at a technical level,is incontrovertible: if the tenure system isadjusted so that the freehold or leaseholdright to a poor family’s abode can be tempo-rarily separated from the right of abode andtransferred to a bank or other owner of capi-tal, then that family is likely to have greateraccess to capital. This is not necessarily apanacea for all ills in informal settlementsbut it may, under certain conditions, con-tribute to creating wealth among the poor.In other conditions, it may lead to gentrifi-cation with or without windfall gains to thepoor who vacate an attractive location tomake way for the more wealthy. Windfallgains are significant in China, through itsown version of tenure regularisation which,as we explain, involves the acquisition offormal property rights through compensa-tion apartments after the informal propertyis demolished. However, the gains fall onlyto the informal landlords, not to the dis-placed migrant renters—which creates a

serious problem of shrinkage in the supplyof low-cost homes.

Payne (2004) makes the point that leg-ally separable rights to collateralised prop-erty are neither sufficient nor necessary forhome investment in poor neighbourhoods:perceived tenure security is also an impor-tant factor. Van Gelder (2009) finds thattenure legality and perceived tenure secu-rity are closely related and that both canenhance housing improvement, butthrough different mechanisms. One conse-quence of recognising the separate effects oflegal and perceived tenure security in thespontaneous upgrading of poor neighbour-hoods is to widen the idea of informality.Informality is not a binary categorisation(formal/informal): there are levels anddegrees of informality. This is closely linkedto the law and property rights theorists’Alchian and Demsetz’ (1973) seminal ideathat a property right, in essence, is not abinary assignment (right/no right); in prac-tice, rights are held in degrees and the levelof right depends not only (or not at all insome cases) on legal writ, but most impor-tantly on the power to enforce. If this istrue, then because property rights are infi-nitely divisible and always therefore incom-pletely assigned (there is always some otherattribute of land that can be partitionedand transferred to another owner), all landeverywhere and all structures on it are tosome degree subject to informal use. Evenin a city as well established and organisedas Milan, Italy, neo-classical buildingfacxades become the informal canvas forgraffiti artists. The purchaser of an apart-ment located in the catchment area of agood state school in a Chinese city maywell pay a price premium of tens of thou-sands of yuan compared with a similarapartment outside the catchment. This ispayment for an informal right to educa-tional public goods: informal in the sense




that the right is protected neither by plan-ning or educational law nor by the privatecontract law by which rights to the apart-ment were acquired. The valuable ‘educa-tional-access’ attribute of the propertycould be taken away without compensationbut the informality of the right does notstop the housing market functioning as asurrogate education market. This is as truein European, American and African citiesas Chinese cities, demonstrating the genericand ubiquitous nature of informality incities of all kinds.

3. Sources of Informality in China’sUrban Villages

We suggest that there are four importantsources of property rights ambiguity andtherefore informality in China’s urbanvillages.

3.1 Dualistic and FragmentedLandownership

Rural land is collectively owned, whileurban land is state owned. The land userights of urban land can be leased to develo-pers through the competitive land market.Urban villages are created by the disjunctureof the dual land use system. The municipal-ity, as the owner of state land, monopolisesthe supply of leased land in the primaryland market. During rapid urban expansion,former rural villages have been encircled byexpanding urban built-up areas, becomingliterally ‘villages in the city’. According tothe 1988 Land Administration Law, updatedin 1998, compensation for land acquisitionconsists of compensation for land, reloca-tion cost and property compensation. Landcompensation is calculated as six to tentimes the average annual output of thefarmland in the previous three years andrelocation compensation is based on thesize of the affected household (Tian, 2008;

Zhao and Webster, 2011). To save costs inland acquisition, the original site of a villagemay not be acquired by state developmentprojects and thus remains in collective own-ership, while the village agricultural land istransferred into state ownership. This pro-cess of land acquisition forms the juxta-posed dual landownerships in peri-urbanareas. Rights over village property areambiguous from two points of view. First,village land tends to be allocated by a mix-ture of administrative fiat (by the villagecommittee) and quasi market mechanisms(through supplementing administrativeallocation rules with price for premiumsites, for example, and then through subse-quent trading—for example, one villageramassing land by buying up other villagers’plots). Secondly, under Chinese land law,the land may not legally be freely transactedin the land market. Village land is inalien-able outside the village, but this has not pre-vented a buoyant black market in so-calledsmall property rights homes. These are soldunder the protection of contracts, but theyare not strictly legal.

3.2 Lax Land Management andDevelopment Control

The formal management and developmentcontrol required by urban plans only coversstate-owned land. Rural farming householdshave been able to build and extend theirhouses with minimal formal developmentcontrol. In rural areas, land for housing isinitially allocated to farming householdsaccording to family size. On these land plots,farmers can build relatively freely withinspace limits. Since 1989, however, manyplaces have stopped allocating land for hous-ing because of the shortage of land. Thisinevitably led to a densification of the histor-ical village housing plots. Villagers’ com-mittees in densely populated peri-urbanareas have therefore allowed farmers to




extend their houses upwards and where pos-sible outwards when their children get mar-ried and need more space. The bigger driverfor village densification, however, has beenbuilding upwards to maximise rental floorspace. Peri-urban villagers surrounded byfarmland converted by the state into urbanuses, find themselves in possession of primeland for migrant worker rental and respondrationally by maximising the yield of theirinalienable assets. Self-built high density isthus the norm rather than exception in ruralareas. Village housing redevelopment is notillegal if the overall housing space is withinthe specified limit (the normal limit is set asthe standard farmers’ housing of ‘two floorsand a half [loft space]’ with a space of 240–280 square metres, depending on province).However, left outside the regime of formaldevelopment control, rental housing is con-structed by individual landlords at muchhigher densities than this, working as smalldeveloper-owners without formal residen-tial land use plans. Each household tries tomaximise the use of its assigned housingplot, building up to the boundary and leav-ing medieval-style narrow gaps betweenbuildings. Urban villages are thus charac-terised by high building coverage and it isthis plus the unregulated quality of con-struction and lack of public goods that makesuch a stark physical contrast between urbanvillages and the other neighbourhoods inChinese cities.

3.3 Informal Service Provision andManagement

The infrastructure of these villages is veryunderdeveloped. Villagers’ committees mayprovide skeletal basic services such asroads, pavements and water supply but, inmost cases, urban villages are outside theformal provision of municipal-govern-ment-supplied services. There is an irony inthis but also a consistent logic. The irony is

that municipal governments generate theirworking revenue from the land taken fromfarmers but they do not generally reinvestany of it (beyond the set compensationcomponent) in upgrading village infra-structure. The logic of this is that themunicipal state has no jurisdiction inurban villages: it neither owns the land norhas a responsibility for territorial govern-ance. Village landlords do not pay tax tothe municipal government and, if they wishto avail themselves of organised urban ser-vices, they hire the services of propertymanagement companies. In this sense,urban villages are rather like an informaland low-income version of the privatelygoverned commodity housing estates builton the farmers’ former fields. The Chineseurban governance and financing model ismuch more in line with the idea of a resi-dential club economy rather than the tradi-tion municipal public-sector economy(Webster and Lai, 2003). The result is anunderprovision of public goods as urbaneconomic theory would predict and a pro-liferation of informal arrangements withdegrees of security of provision.

3.4 Marginal and Ambiguous Status ofVillage Governance

This fourth dimension of informality isclosely related to the third. The emergenceof informal rental housing in urban villagesis a result of the constrained housing supplyfacing millions of rural migrants who aresubject to severe discrimination and disad-vantages in obtaining other kinds of hous-ing (Song et al., 2008). This kind of rentalhousing is developed under a marginaliseddevelopment process (Wu, 2004; Liu et al,2010) because municipal governmentsadopt a highly urban-biased developmentapproach and, as we have noted, neglectinvestment in ‘leftover’ villages. The gov-ernance of these villages has an inferior




status because it is the preserve of villagers’committees. In reality, it is the shareholdingcompanies formed to control villagers’ col-lective assets rather than the village admin-istrative government that takes on theresponsibility for providing basic social ser-vices. On the one hand, the ability of villagegovernment to adapt through incorpora-tion is a strength and has undoubtedly con-tributed to the dynamic nature of the urbanvillage economy. On the other hand, it hascreated even more ambiguities in responsi-bilities and a greater discontinuity thanmight otherwise have been the case withformal urban governance.

4. The Persistence of Informalityafter Redevelopment

The informal urbanisation described, startsin peri-urban villages before the acquisitionof farmland. In villages at distances up to 50km or more from large cities, evidence canbe found of village-initiated urban develop-ment on parts of village land (Webster et al,2005). An acceleration of the processes istriggered by farmland acquisition. Theinformal urban order we have describeddoes not disappear through the process ofvillage land acquisition, however, and thereare two important specific ways in whichinformality persists in the life of an urbanvillage.

First, compensation practices contributeto the persistence of informality, particularlyin southern China. To reduce the monetarycost of compensation, local governmentshave typically returned a proportion of agri-cultural land as in-kind compensation,known as ‘economic development land’(jingji fazhan yongdi), to villagers (Tian,2008), transferred back to them as a collec-tive asset to be developed into non-agricultural income-earning uses. Propertyrights over land in this part of a village

redevelopment plan are in collective owner-ship. These lands are subject to little formaldevelopment control. This further expandsthe stock of land outside the state’s formaldevelopment regime, which strengthensrather than reduces informality.

A second way in which informality per-sists is in the internal dynamic establishedby a buoyant rental economy. Over time,the growth of the rental economy in urbanvillages has meant that there are hundreds ofneighbourhoods in any one large city, co-owned by a new rentier class of villager whohas long ago abandoned the hard and dirtywork of farming in favour of the informalurban economy. Informality has repaidthese families handsomely and villagers havea deeply entrenched interest in finding waysto maintain and expand their privilegedinformality. One way is to resist any formaldevelopment control by the municipal gov-ernment over the use of their land and insome cases to resist urban redevelopment.The resistance is even greater from villagerswho have developed rental factories andcommercial buildings since their incomeloss is typically greater than owners of resi-dential rental property (Tian, 2008; Zhaoand Webster, 2011; Liu et al., 2010). The sizeof the migrant rental economy in urban vil-lages can be said to have helped to sustainthe informality of these parts of the Chinesecity—the informal economy providing cru-cial income to landless farmers who wouldotherwise suffer from poverty and depriva-tion (He et al., 2009) and creating opportu-nities for non-agricultural activities such aslow-level urban services, workshops and vil-lage enterprises. Wang et al. (2010) observedthat, because of the practice of returningland to farmers, urban villages have acquiredan important function in manufacturing.Small enterprises and workshops located inthese villages, usually on collective land,provide employment to local villagers aswell as to migrant workers. Viewed as micro




urban economies, not just migrant dormi-tories, it is clear that urban villages in Chinaplay the familiar role of the informal settle-ment in other developing countries: provid-ing affordable housing to rural migrants, anentry-point for people from the same originand a low-rent enclave within which to tryand build a productive urban life (Ma andXiang, 1998; Zhang, 2001; Zhang et al.,2003; Song et al., 2008; Wang et al., 2010).

5. Three Chinese Urban Villages

In this section, we examine three urban vil-lages respectively located in Beijing,Shanghai and Guangzhou. The dimensionsof informality are explored, taking a com-prehensive narrative.

5.1 Research Method

The original research presented in this paperwas conducted from May to September2010 as part of a larger study of peri-urbaninformal settlements in Chinese cities. Weconducted face-to-face semi-structuredinterviews in three cities (Beijing, Shanghaiand Guangzhou). In each city, we selectedfour to five villages within which to conductcase studies and undertake a survey(reported in other papers); we conducted 15interviews in each city lasting from 30 min-utes to 2 hours and collected other informa-tion from key informants. In addition, inShanghai, the investigation was facilitatedby focus group meetings in local districtplanning offices, in conjunction with sepa-rate research organised by the municipalplanning bureau. For the current paper, wechoose to focus on three villages; two thathave received wide media attention(Tangjialing in Beijing and Gaojiabang inShanghai) and the other, an archetypicalproject for city-wide policy formulation(Liede in Guangzhou). We collected internaldocuments for village planning and

government policy through our collabora-tors, all of whom had expert knowledgein their respective villages through inde-pendent academic or government-commissioned research.

5.2 Tangjialing in Beijing: Enclave of the‘Ant Tribe’

Tangjialing is located in the town ofXibeiwang outside the fifth ring road ofnorth-west Beijing. The ZhongguancunScience Park extended to this area in 2000and the arrival of workers in the IT sectorstimulated a huge demand for housing. Thelow-income IT workers became knownlocally as the Chinese ‘ant tribe’ (yizu)because they could not afford formal hous-ing and lived like ‘ants’. As well as con-structing their own rental properties,villagers leased land to private developers(who ‘informally’ developed residentialcompounds in Beijing) to build large stan-dard rental apartments, creating a residen-tial compound managed commercially byprivate companies. These apartmentsbecame known as ‘student apartments’ and,later, as ‘white-collar apartments’. Thisillustrates both the persistence of informal-ity and its trajectory towards greater form-ality as the value of informal collectiveassets rises in the face of demand. The qual-ity of these apartments is much better thanindividual self-built blocks, but the rentalactivities are nevertheless still informal inthe sense that they are not recognised as aformal business that should pay urbantaxes. Instead, apartments built on collec-tive land contribute rental income to thevillagers’ management committees througha ‘lease contract of land’. The contract isupheld by contract law and formal in thatsense, but in theory it is illegal in the sensethat it contravenes the state’s property rightover the conversion of agricultural land tourban uses.




The rent in Tangjialing ranges from 300yuan per month for a low-quality room ofaround 10 square metres to 700 yuan permonth for a relatively better-quality 20square metre studio with kitchen and toilet.Surprisingly, most rental housing has anInternet connection. Because the rental hous-ing market is competitive, landlords are quiteinnovative in improving housing conditions.For example, in some buildings, the corridorsof the second floor upwards use transparentpanels to allow light to pass through to lowerfloors. Seeing this kind of practical innova-tion, one planning professional commented,‘‘this is really marvellous; we could not dothis because we simply do not know what thetenants need’’ (personal communication,July 2010). Another example of market-driven innovation is the provision of a smallshuttle bus by a large landlord to connect res-idents with the bus station at the entrance ofTangjialing. Shuttle buses are convenient fortenants and have become a selling point forresidential compounds such as the DongjiaCompound. Others plan to follow, one land-lord telling us of his plan to buy a small van(an unregulated transport service) to do thesame, which was only suspended when heheard of the plan for demolition of nearbycompounds (personal communication, July2010). Most tenants in Tangjialing seem sat-isfied, as one young couple suggested to us,when they were preparing the check-out pro-cedure with the landlord and leaving becauseof the forthcoming demolition

Could you please ask the government not to

demolish this place? We are quite happy to

live here, and now we have to find another

place and don’t know whether we might have

the same kind of customised buildings to live

(personal communication, July 2010).

The management of services, as shown inthis example, is generally informal, depend-ing upon demand and perceived profit

opportunities. Informality thus makes fordynamism and responsiveness to the needsof the local market. In March 2010, theproject to redevelop Tangjialing officiallystarted (Figure 1). Instead of using thewords ‘demolition and relocation’ (chaiqian), the phrase now adopted in Beijingfor redevelopment is ‘vacating’ (teng tui),implying that for landlords and local villa-gers this means temporarily vacating theold homes and then returning to the sameplace after the project is completed.

The case shows that, although informal-ity persists with the inbuilt dynamics wehave suggested, its trajectory, at least here,is towards full integration with the formaleconomy. This happens when propertyrights are shared between the municipalstate (district or municipal level), develo-pers and onward purchasers of land leasedby the state and the residual and formalisedinstitutions of village collective organisa-tion—namely, the stock companies thatown ‘compensation land’ ceded back to vil-lagers by the state together with other assetswon by the villagers during the redevelop-ment negotiation process. At this point,there is little informality left. There may besome ambiguity in the rights allocated bythe village companies and there will almostcertainly be ambiguities in the relationshipsbetween the residual village administrative

Figure 1. The demolition of Tangjialing.




committees and the incorporated equiva-lents. Yet since the village committees willdisappear and be replaced by residents’committees under street office governance,this is the end of the trajectory. This is avery different trajectory from those of infor-mal settlements in other countries. The endgame is redistribution of property rights viaa mixture of market, government and col-lective institutions and the formalisation ofeach of these in different ways.

5.3 Gaojiabang in Shanghai: A HiddenEnclave of Informal Housing

Gaojiabang is hidden away behind a pros-perous street in the district of Xuhui, a well-developed central district in Shanghai. Theentrance to this village is very modest, unex-pectedly leading to a high-density, congestedresidential area of low-quality housing withbustling narrow streets full of small shopsand stores. The registered population is 1373individuals, but the migrant populationadds about 3000. About 20 per cent of the1373 local residents still live there (interview,‘street officer’, June 2010), the others havingmoved out to the suburbs for better housing.The area of Gaojiabang is about 60 mu (4hectares).

The modern history of Gaojiabang isassociated with the rise and fall ofShanghai’s colour TV industry. Before the1980s, the place was at the edge of thebuilt-up area of the city. The village’s agri-cultural land was acquired and later usedby the TV factory, but the factory becamebankrupt in 2009; the place was then underthe management of Caohejin ETDZ (nick-named, ‘Cao developer’), which has nevermanaged to acquire the village site becauseof the Shanghai government’s strict controlover the land conversion process. InShanghai, the municipality strictly legislatesagainst negotiations between developersand villages. This has the effect, among

other things, of weakening the villagers’bargaining position and reducing their cutof the urban land value created by redeve-lopment. Following the normal dynamic ofurban villages, the area experienced sponta-neous densification over the years as land-lords responded to a market demand forsmaller and hence cheaper units. The areais central, well developed and very accessi-ble for service-sector workers, so as long asit remains un-redeveloped this piece ofresidual space has a powerful niche posi-tion for low-quality, crowded but cheapaccommodation, which is very popularwith tenants (personal communication,landlord, August 2010).

The case suggests that the on-goinginformality in this village results from atypically complex structure of ownershipthat includes a more attenuated version ofvillage collective right than in Beijing andother cities. A fragmentation of administra-tion structure at the time of developmentmay have exacerbated the uncoordinatednature of self-build activities and left allo-cation of property rights over buildings andshared land unclear and undocumented.The initial land transaction when the TVfactory and worker village was built hadshades of informality but appears to havebeen endorsed by the state and was not, inthat sense, illegal. This is quite distinctfrom the first case. There, informality wasassociated with illegality and althoughinformality persisted with positive effects, itcame to an end because property rightswere not sufficiently ambiguous and/orfragmented to prevent comprehensive rede-velopment. In Gaojiabang, fragmented andambiguous ownership plus the lack of villa-ger rights to negotiate a favourable collec-tive deal with potential developers haveprevented comprehensive redevelopment.The irony in this is that the strong statecontrol over the right to urban land valueincrease (capping this for villagers at




statutory compensation levels on theassumption that villagers do not have anyright to development value) has the effectof protecting the informal settlement fromredevelopment through stalemate. Weshow in the third case study how theGuangzhou government has overcome this.

5.4 Liede in Guangzhou: A Vertical Villagethrough Massive Redevelopment

Liede is located in the new city centre ofGuangzhou in Guangdong province. Thecentral location means that this village isexceptional in terms of accessibility andimportance to the image of the city, whichis a strategic priority of the municipal gov-ernment. It is inside the new central busi-ness district of Guangzhou known as ‘PearlRiver New Town’. The village is a long-established one, with a total population of7800 people (about 3000 households) in2010 and a migrant population of 8000 in2008. The village occupies an area of 33.7hectares. The total existing building floorspace is 653 000 square metres, of which595 000 square metres (over 90 per cent)have formally approved property certifi-cates (internal documents for the draft planof the area, obtained in 2009).

The cost of redeveloping a single villageusually amounts to several billion yuan(interview, manager of a major developmentcorporation in Guangzhou, September2010), a figure that has risen consistentlyover time. Faced with rising costs, themunicipal government made virtually noprogress in the redevelopment of villages inthe 1990s. The bargaining power of local vil-lagers is strong in southern China because ofthe clan network organisation that overlaysadministrative (villagers’ committee), politi-cal (local communist party) and corporate(village stock companies) organisations. Togain more compensation as well as rentalincome, villagers extended and in some

cases comprehensively replanned and recon-structed the residential buildings con-structed on their housing plots. Some villagebuildings are as high as 15 floors, creatingthe most dense chengzhongcun in China. Inan effort to break negotiation deadlocksfacing its redevelopment programme in thecity, the municipal government conceded anupper limit for compensated space at 280square metres under the conditions of rede-velopment (interview, district planner,August 2010). In Liede, however, such wasthe power of the villagers in this prominentlocation that this compensation limitrestriction was relaxed (interview, municipalland administration bureau, August 2010).The gradual concession of a larger fractionof urban development land value to villagersgiving up their land makes it more likelythat villagers subsequently facing redevelop-ment will use all means at their disposal(popular protest, political connections,patronage and legal challenge) to hold outfor a better compensation deal and the pro-cess is thus self-reinforcing.

In the new phase of redevelopment start-ing in 2008, there has been no uniform city-wide policy. Instead, individual villagesnegotiate with the municipal governmentunder the ‘one village, one policy’ (yi cun yice). What is unique in Liede’s redevelop-ment package is that villagers were fullycompensated according to a 1:1 compensa-tion ratio—i.e. compensated space is equiv-alent to full-property rights spacedemolished. Even for non-certified floorspace, however, villagers were given 10 percent of the floor space in compensation.This greatly smoothed the redevelopmentprocess and meant that some villagersacquired as many as seven compensationunits (interview, district planner, September2010). To do this, the municipality had torelax its own legal density controls—whichmay be viewed as another kind of informal-ity persistence. Because of the excessively




high-density redeveloped collective assets,the newly redeveloped village is nicknamedthe ‘vertical village’ (personal communica-tion, university researcher, August 2010).

The three cases show that sources ofinformality and the approach to redevelop-ment vary across different cities. Informalitymeans many things and we have technicallydefined it as arising from ambiguities inrights over urban resources. The differenceswe have described are reminiscent of thediversity of informal settlements in LatinAmerica (Gilbert and Ward, 1985). Makingthe comparison between three cities in thesame country enables us to be quite specificabout the sources and trajectories of inform-ality which, as we suggest in our earlier dis-cussion, reflect the relative strength ofsanctions wielded by the institutions gov-erning the contested assets found in urbanvillages.

6. Conclusion

This paper is based on an analysis of urbanvillages in Beijing, Shanghai andGuangzhou. The villages have all been thelocation of widespread self-built, high-density and low-quality housing for ruralmigrants. We have identified the sources ofinformality and explained why govern-ments continue to strive to formalise rentalhousing owned by former farmers. Theinformality in these settlements, by whichwe mean property rights ambiguities, wassewn into the institutions of urban–ruraldualism prior to market reform and hasflourished and diversified since the intro-duction of market mechanisms. The own-ership and responsibility ambiguitiesresulting from a dual land market, adminis-trative land allocation within collectives,parallel political and corporate organisa-tions representing near-overlapping sets ofvillagers, weak development control

institutions and from years of unregulatedentrepreneurialism, mean that informalityhas multiplied along several interlockingdimensions under market-led growth.

Because of the persistence of urban–ruraldualism, full alienable land title to ruralland is denied to villagers and farmerscannot sell their land to developers. On theother hand, the management of rural landis more lax, partially because of the lack ofland management capacity in rural areasand partially because of the practice ofallowing farmers to retain some land as in-kind ‘compensation’ to save the cost of landrequisition. Farmers are allowed to changeagricultural to non-agricultural uses on thisland by self-development. Informal devel-opment is exacerbated by complex landow-nership created during piecemeal landrequisition and constrained by the exten-sion of urban governance to rural areas.Through the demolition of urban villages,the state hopes to create more ‘governablespaces’. This is achieved through a formalland development process through whichvillage land is acquired by the local state tolease to larger developers in the formal landmarket. However, informality is not imme-diately eradicated. On the contrary, redeve-lopment diminishes informal-sectorhousing because the formally developedcommodity housing is generally simply tooexpensive for migrant workers and theirfamilies. The informality thus allows thepoor to live on lower wages and thereforebring down the cost of production—a phe-nomenon well identified in the literature ofdevelopment studies.1 This thus creates ademand for alternative informal housingelsewhere. When urban villages are demol-ished, some migrants are pushed furtheraway to other villages in the peri-urbanarea. Others, who can afford to rent the vil-lagers’ newly redeveloped properties on thesite of the former village may stay in situ inneighbourhoods that look less like slums




but nevertheless may be informal in thesense of being governed by multipartieswith respective rights not fully delineated(village committee, stock company, individ-ual villagers and local government). As aresult, informality is to a degree, sustainedand transformed.

These cases also show that the detailedprocesses of creating informality and of for-malisation through redevelopment are dif-ferent from place to place. This is contingentupon different configurations of the relationbetween the state, capital, land and villagers.In Shanghai, the governance capacity isstronger than in the other two cities andhence the regime of formal developmenttends to dominate in the process of villageredevelopment. However, such a formaldevelopment approach is not able to ‘con-quer’ a place where there is complicatedlandownership and/or unfavourable devel-opment conditions such as smaller parcelsor irregular plot shapes. Informality inplaces such as Gaojiabang thus remains. InGuangzhou, self-built and informal landmarkets are more established because tradi-tionally the role of villagers’ committees andother rural organisations is stronger.Recognising the power of villagers, themunicipality has taken a pragmaticapproach to compensate villagers more gen-erously, leading to the emergence of largeredeveloped projects in these villages. InBeijing, the state, developer and villagesjointly participate in the process of redeve-lopment. While the compensation to villa-gers is often better than in Shanghai, theredevelopment process requires formalisa-tion similar to that of Guangzhou. Thediversity of these cases shows that there is nostandard practice of village redevelopment,as implied by the title of Guangzhou’s ‘onevillage, one policy’. The difference betweenthe villages shows that there is tremendousdiversity in the sources and practices ofinformality and the formation, destruction

and evolution of informal settlements inChina—as is the case in the rest of the world(Gilbert and Ward, 1985; Payne, 2004; Royand AlSayyad, 2004). The fact that there issuch diversity in practices between thesethree Chinese cities indicates the informalpractices—flexible and ambiguous applica-tion of the law with respect to local circum-stances. China is a good laboratory forstudying the nuanced variations of inform-ality in cities facing different circumstancesbecause it has great local diversity but acommon set of strong overarching institu-tions governing land development. In fact itis, ironically, the strength of these institu-tions (principal amongst which is the dualurban–rural landownership system), thathas given rise to much of the legal ambiguitythat we have defined in this paper as‘informality’. The reason for this is that thedual landownership system at all pointsimpedes normal land market practices andinhibits and distorts those markets. Theprize from this state of affairs is shared by allstakeholders: the rural–urban migrantworkers who find cheap housing in theurban villages; the enriched rentier class andsmall-developer village landlords; and thestate, which benefits first, from the eco-nomic contribution to the city provided bythe cheap labour housed in these informalspaces and, secondly, by land value upliftearned through redevelopment. The domi-nance of the beautification and modernisa-tion narrative in discussions about urbanvillage redevelopment is rarely balancedwith a discussion of the opportunity cost tothe local economy of removing the mainsource of low-cost homes. Pragmatically,policy-makers probably simply assume andaccept that their attempt to eradicate infor-mal spaces will push the informality furtherout to the urban fringes, to newly engulfedurban villages, which can be dealt with later.There is a typically Chinese logic to this,which may well work. If city-wide




programmes to redevelop urban villages aretoo successful, however, it is likely that thefirst prize will fall to villagers and theirdeveloper partners (i.e. the owners of landand capital). Migrants will lose out by nothaving access to jobs and the urban econ-omy will eventually lose out through asmaller and poorer-quality low-skilledlabour force. Of course, some cities mighttry to eradicate informal settlements forstrategic economic reasons. Shenzhen, forexample, demolished low-cost homes in2005 precisely to drive rural migrant work-ers away to help shift the economy towardshigher value-added manufacturing and ser-vices (personal communication, Shenzhen’sdeputy director of housing bureau, 2005).The informality in Chinese cities is thus pur-posely permitted as an economic develop-ment approach (through the variance andflexible execution of formal regulation andlaw) and also constrained for the sake ofgovernance (see Roy, 2009, for ‘informalityas exception’).

Note

1. We would like to thank an anonymousreferee for reminding us of this point.

Funding Statement

This research is supported by the UK Economicand Social Research Council (ESRC)/Department for International Development(DFID) project (RES-167-25-0448) and theMinistry of Education of PRC project atModern City Research Centre at East ChinaNormal University (11JJD840015).

Acknowledgements

This research is being undertaken in collabora-tion with Chinese partners. The authors wouldlike to especially thank Professor Yuemin Ning,Dr Mingfeng Wang, Xiujin Bi and Xiaoling Linin Shanghai, Dr Zhigang Li, Dr Shenjing He in

Guangzhou, and Dr Jian Feng, Dr Yun Qian inBeijing for helping with the fieldwork.

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