China: Informality in Urban Villages

From Beijing to Mumbai, from São Paulo to Johannesburg, Southern metropolises have become the frontier of urban growth. In many cities in the developing world, older modes of urbanism are being replaced by “new”, informal types of urban transformation. Urban informality – including informal employment, informal housing settlement, and informal politics – casts major challenges for both long-standing and contemporary approaches to urban planning and urban governance. How well policy-makers are able to respond to the challenges will have a significant impact on the lives of billions of city-dwellers as well as affecting the urban future of the world.

As the largest developing country in the world, China has experienced rapid urbanisation since the economic reforms of the late 1970s. China’s urbanisation rate increased from 17.9% (1978) to 39.1% (2002) over a period of 24 years. It took Britain 120 years, the United States 80 years, and Japan more than 30 years to accomplish this. In the past few decades, China’s urban population growth has been higher than that of Asia as well as the world. More than 200 million Chinese have moved from rural areas to cities since the late 1970s. Another 250 or 300 million people are expected to follow in the coming decades. By the end of 2012, China had a total urban population of 712 million that accounts for 52.6% of the entire population.

Such rapid urbanisation has significant spatial, economic and social consequences. One of the most important and visible products of this are China’s urban villages. When you walk around in big Chinese cities, you often see villages appearing on both the outskirts and in the downtown areas. They are surrounded by skyscrapers, transportation infrastructures and other modern urban constructions. As a form of informal spatial development, urban villages provide a unique lens to understand the urban land regime, territorial politics, and urban governance in China.
There are two institutional factors that directly contribute to the creation of urban villages: the dual land-ownership and the household registration (hukou) system.

China’s land reform in the 1950s established two types of land-ownership – the urban land is publicly owned by the state, while the rural land is collectively owned by villagers. In the vast rural areas, village committees – self-governing bodies elected by people in each village – make critical decisions about their land. After China launched the economic reforms of the late 1970s, a Collective Economic Organisation (VCEO) was established in every Chinese village. The VCEO of the village represents villagers exercising their ownership right over the land, whereas individual villagers are endowed with land use rights to conduct agricultural activities. Meanwhile, they also retain a portion of the land for self-residential use. Neither VCEO nor villagers can change the ownership or the designated purpose of rural land. Only the government can transform collectively-owned rural land to publically-owned urban land through expropriation. After paying compensation to villagers, the government can lease the land to private developers for redevelopment.

In the process of rapid urbanisation that began in the late 1970s, local governments all over China participated in a competition of land requisition in order to accommodate urban sprawl and increase local revenue. They actively took over rural land and converted it into urban land for redevelopment. When expropriating, the government preferred (and still prefers) cropland to villagers’ residential land. This is partly because the ambiguous concept of rural collective land-ownership legitimises the expropriation of green land. However, it becomes more complicated and difficult when expropriation targets residential land. To avoid paying higher compensation or having potential disputes, local governments tend to avoid claiming residential land whenever cropland is still available. This expropriation preference results directly in the emergence of urban villages, where the residential areas of villages are left standing while the surrounding green land is converted to urban land for urban development.

If the dual land-ownership provides a basis for the creation of urban villages, the household registration system is a critical social dimension that further consolidates and complicates the situation. Established in 1958 as a means to control population mobility, the household registration system classifies everyone in China as either urban or rural population according to the status of his birthplace. Rural and urban populations are subject to different welfare systems. Urban residents’ welfare (housing, education, healthcare, pension, etc.) is provided by work units (dan wei), whereas that of the rural residents is provided by village collectives. As a result of wild rural land requisition, however, many rural collectives have dissolved. Meanwhile, villagers are deprived of land, the primary means of livelihood, but their household registration status remains rural so that they cannot enjoy any of the welfare benefits offered to urban residents. To help themselves and enhance their levels of income, villagers in urban villages begin to rent their spare rooms to migrant workers.

Rents soon become the villagers’ primary source of income. To maximise land use and increase rent, urban villagers build housing on their reserved residential land. Most of the buildings are four or five storeys in height, and unregulated by any formal planning policy. Inside urban villages, it can be dark and damp all year round. One has to use electric lights even during the daytime. The buildings are substandard and most urban villages are short of basic infrastructure, and the density of the buildings is extremely high. The building density in some villages is as great as 70%. People call buildings in urban villages “shaking-hand buildings” – the buildings are so close to each other that neighbours can shake hands through their windows. The buildings recently got a new nickname: “kissing buildings” – the buildings have become even closer so that you can kiss your neighbours through the windows!

The informal housing market in urban villages is fueled by the increasing demand for cheap housing from migrant workers. Due to the household registration system, migrant workers are not eligible to apply for publicly subsidised houses or to buy houses in the city where they work. Many of them cannot afford to rent a house in the formal housing market, either. Therefore, to rent a place in the informal housing market of the urban villages becomes the only possible choice. In other words, under the current dual land-ownership and household registration system, urban villagers’ need for a new source of income and migrant workers’ demand for affordable housing have jointly enticed and sustained the rapid expansion of the informal housing sector. Their collective demands have consolidated the development of urban villages. But besides providing an affordable place for migrant tenants to live, urban villages have increasingly become the breeding grounds for social problems such as crime, drug addiction, alcoholism, and prostitution, thus presenting serious challenges for urban governance.

While urban villages can be found in many major cities in China, they are more prevalent in Southern China, especially in the cities of the Pearl River Delta, such as Guangzhou and Shenzhen. In Shenzhen, one of China’s first Special Economic Zones (created in 1980), there were 241 urban villages in 2005. In Guangzhou, the capital city of Guangdong Province, the urban villages account for 22% of the built-up urban areas of the city and are home to 700,000 indigenous villagers and 1.2 million migrants. Meanwhile, it is evident from the census data of different cities that migrant workers are the majority population in urban villages. In Guangzhou, for instance, while the population of migrants varies in different urban villages, the ratio of indigenous villagers to migrants ranges from 1:1.5 to 1:30.

While rents collected from the informal housing market are the primary source of income for indigenous villagers, there are also other forms of economic activity in the villages. For instance, many urban villages lease their land to factories, and collect money in that way. At the same time, migrant workers who work in those factories also contribute to the villages’ economy. In addition, almost every urban village has a main market street, where small businesses including grocery stores and service shops become the third pillar of village economy. These stores are normally started by indigenous villagers and then leased to migrant workers as the original occupants become richer. It is through the various economic activities that urban villages have become economically self-sustaining systems.

The Chinese government has placed the redevelopment of urban villages among the priority issues on its agenda. In The Report on the Work of the Government delivered at the Second Session of the Twelfth National People’s Congress on March 5, 2014, Premier Li Keqing contends that one major task of the government is to redevelop the urban villages in China, where around 100 million people live. To follow the direction set by the national government, many cities have created new institutions and policy initiatives to redevelop urban villages. In Guangzhou, for example, the municipal government has recently identified 138 urban villages as targets for redevelopment. The redevelopment process is highly contested, involving constant negotiations over compensation between developers and villagers, with the local government as mediator. The most commonly used approach to redeveloping urban villages is to demolish all existing structures and build high-rise apartment towers. Some of the apartment units are distributed to the villagers to compensate them for their loss and the rest is sold on the market for new projects. Under such a redevelopment approach, most migrant tenants are displaced. They are forced to move to a more remote location, and form a new enclave – until their new home is “redeveloped” again.

The case of China’s urban villages demonstrates the prevalence of urban informality in the rapid urbanisation in developing countries. Similar to other types of informal spatial arrangements, urban villages in China were created under specific political, economic, and social conditions. They cannot be disentangled from local politics and policy discourses. Hence, the redevelopment of urban villages needs to take into account political factors as well as the bigger picture of China’s urban transformation. It is important to identify more equitable and sustainable design and policy solutions to improve the lives of both migrant tenants and villagers. This would require a better understanding of the mechanisms of urban informality and a more inclusive approach to urban governance.

Yue Zhang is Associate Professor of Political Science at the University of Illinois, Chicago, and has been consultant to UNESCO and the European Commission on issues of historic preservation, sustainable urban development and municipal reform.