Institutional Innovation for Urban Village Renewal in Mainland China

Introduction

Land is the foundation of human survival and development. Land, capital and labor are the basic elements of social production, which can boost economic efficiency by allocating these factors efficiently (Hayek, 1945). However, the land element as one of the most essential production factors had been overlooked for a lengthy period. The land reform has had great effects on economic development, accelerating industrialization and urbanization (Xie et al., 2013). Generally speaking, land use efficiency is dynamic. Smith (2005) claims that alterations of institutional arrangement of land use always shift in the direction of efficiency improvement. It seems that this pattern applies to the situation of China very well. After the land reform was initiated in 1987, along with housing and fiscal reforms, China has been experiencing rapid urban development and expansion (Cheng & Masser, 2003), which has played a major part in China’s economic growth and modernization (Huang, 2015; Lichtenberg & Ding, 2009). Rapid urbanization will still continue (Hui and Bao, 2013; Xu et al., 2011). As estimated by Cheng and Masser (2003), the level of urbanization is likely to reach 75% by 2050.

Nevertheless, sub-optimal land use prevails in urban villages. In addition, such places are often characterized as “institutionally insecure, disorderly, economically under-productive and incompatible with modernity” (Sargeson, 2013, p.1066). Renewal of urban villages, obviously being one kind of urban development form, plays an important role in enhancing land value, land use efficiency and living environmental quality (Adams & Hastings, 2001). Yet, implementing this type of project is impossible without confronting the issue of “community involvement” or “public participation” (Zheng et al., 2014). Sometimes, the implementation process is tedious, for assembly of all the land plots can be time-consuming, especially when ownership becomes more fragmented in urban areas (van der Krabben & Needham, 2008; Miceli & Sirmans, 2007). Conflicts and tensions always occur when government uses the power of eminent domain to expedite urban development, posing a great threat to the country’s social stability and the sustainability of its economic development (Hui & Bao, 2013; Sargeson, 2013; Zhao, 2009). For instance, the conflicts between police and villagers in Guangdong province on 19 January 2010 were resulted from a forced demolition of an urban village, which led to nearly 10 villagers being injured and many police cars being burned (Beijing Times, 2010). Later in the same year, three householders burned themselves to resist the forced eviction in Yihuang, Jiangxi province on 10 September 2010 (Tencent News, 2010). The continuing conflicts provoked consequently aroused increasing attention from both the academic and social spheres. “Legal demolition” was thus found one of the hottest social issues in 2010 (People’s Daily Online, 2010).