CITY AND REGIONAL PLANNING, UC BERKELEY

ChengZhongCun (城中村) in China

An issue to be solved or a solution to be acknowledged

Yiyan Ge Master Student

Abstract

Urban Villages, also ChengZhongCun in Mandarin, is a type of informal settlements that have

unique characteristics in the context of the rural-land dichotomy, the land movement, and the urbanization process in China. It is commonly problematized because of the substandard living conditions, deficient infrastructure and services, and the prevalence of social disorders. The government has been focusing on redeveloping these urban villages via different methods. The scholars have also proposed different approaches to the issue. However, social consequences of some of the approaches are often unattended. In this paper, I will challenge the problematizing of ChengZhongCun by critiquing the commonly adopted dichotomy view of informal settlements and also by presenting the functions of urban villages in the social context in China. Overall, I argue that ChengZhongCun should not be seen as a product of an imperfect system but a spontaneous solution to a larger social issue.

Introduction

Urban villages, known as ChengZhongCun, are a phenomenon most commonly seen in cities

in the Pearl River Delta in China (Tian 2008). It is a product of the massive land acquisition conducted by the governments due to the need for rapid urbanization in the late 20th century (Liu and Yang 2004). To avoid the high costs of compensating and relocating residents of the villages, the state and city governments did not acquire the land where the original villages are located (Zhang, Zhao, and Tian 2003; Wu, Zhang, and Webster 2013). Instead, only the farming land is acquired by the state and subsequently converted into the urban land, which has undergone rapid urbanizations through various urban development projects. The site of villages stays collectively owned by the village. Due to its unique landownership, management, and governance, the urban villages become rather distinct from the surrounding land owned by the state (Figure 1).

Besides the urbanization process, other factors also contribute to the emergence of ChengZhongCun as well as explain their persistent presences in the urban environments (Tian 2008; Song, Zenou, and Ding 2008). Besides the fact that rental housing in ChengZhongCun is a crucial source of income for villagers, urban villages also provide affordable shelters for rural migrants. This function is extremely important in the context of the growing rural-urban migration and the urban-rural dichotomy in China, which I will address in details later in the paper.

ChengZhongCun have been a concern for the state and city governments for various reasons, such as overcrowded housing construction, unregulated housing, deficient infrastructure and services, and social disorders (Figure 2) (Li and Chang 2002; Liu and Yang 2004; Tian 2008; Song, Zenou, and Ding 2008).

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 Figure 1 ChengZhongCun in Guangzhou. It has a rather distinct feature from its surrounding environment. (Source: Xijiang Dushi Newspaper).

Due to either a lack of efforts or failed efforts, ChengZhongCun and associated social concerns

have remained. Many scholars have examined the issue, explained it from various perspectives, and proposed different solutions. In the following sections, I am going to discuss two solutions to informal settlements, one in the global context and one in the case of ChengZhongCun specifically. Building on the debates around these two approaches, my aim is to challenge the problematization of ChengZhongCun. Instead of treating ChengZhongCun as an unfavorable product of an imperfect system, I argue that we should acknowledge the functions of ChengZhongCun and see it as a solution to a broader issue that persists during the process of urbanization in China. With that lens, we then can discuss how to improve living conditions in urban villages and how to combat its externalities.

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 Figure 2 ChengZhongCun in Shenzhen. (Source: Song et al. 2008)

The debate on De facto and De jure security of tenure and its application in ChengZhongCun

Improving the quality of life of informal/illegal settlement dwellers has been high on the agenda of the United Nations and many developing countries where slum population increases dramatically. Such increase, in many cases, accompanies the rapid urban growth and the growing urban population. Housing conditions for these slum dwellers, however, are problematic and pose serious threats to basic human rights. For this reason, people have debated around what effective international housing policies should be formed to offset slum proliferation and improve housing conditions (Kiddle 2010).

One major debate centers on whether legalization approaches to informal settlements are valid. The legalization approach, which mainly refers to property titling, is the most conventional approach adopted by international organizations, such as the World Bank (Varley 2002; Kiddle 2010). The essential concept dates back to the early work by John Turner, who promoted the idea of encouraging housing improvements by residents themselves through enhancing security of tenure (Turner 1968; Varley 2002). Security of tenure, defined as ‘rights of all individuals and groups to

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effective protection from the State against forced eviction’ (UN-Habitat 2006), can be improved through the provision of legal titles. Therefore, the legalization approach becomes popular in the global setting and is often used to combat slum poverty and related issues. Until recently, the debate was heated up again because of the reiteration of the idea by another proponent, Hernando de Soto. Besides the similar claim to Turner’s that residents are encouraged to improve and upgrade their homes with legalized property ownership, de Soto emphasizes on the economic dimension of the formalizing of property (Varley 2002). He argues that huge resources possessed by informal settlement dwellers are wasted because of the lack of legal titles over these resources and formal property titles increase residents’ access to credits, such as using housing as collateral to secure loans for other purposes, which essentially help dwellers utilize ‘dead capitals’ under the situation of illegality or informality (Varley 2002; Kiddle 2010). Other scholars in support of the idea also discuss a range of benefits through tenure legalization. Some benefits include allowing people to enter the property market and receive market prices, increasing property values, and integrating informal settlements into the regulatory sector of the city (Kiddle 2010).

However, the counter argument states that de jure security of tenure, via formalizing property titles, is not panacea to the problem because in many cases the security of tenure can be influenced by other factors and it is not necessarily achieved through the legalization approach (Kiddle 2010). Kiddle (2010) further illustrates that the de facto security of tenure rather than de jure security of tenure, is what should be focused on in the debate about effective housing policies regarding informal/illegal settlements. In addition, residents’ perceived security of tenure is not necessarily solely determined by legality of illegality of tenure therefore the legalization approach should not be treated as the only mean to housing improvements (Kiddle 2010). For example, if residents perceive no likelihood of evictions, they are still likely to invest in upgrading housings even without legal property titles (Payne 2001). Some examples of other factors influencing de facto security of tenure include the duration of settlements, the size of settlements, and the presence or lack of community organization (Kiddle 2010).

Before diving into another set of counterarguments to the legalization approaches, I want to point out that the relevance of the debate around de facto and de jure security of tenure to the case of ChengZhongCun lies not so much in the similarities between ChengZhongCun in China and other informal settlements in other developing countries. Nonetheless, the debate is relevant and the relevance lies in the counterarguments that I am about to show. ChengZhongCun in China have many characteristics that distinguish them from the common concept of informal settlements. For example, the land and original buildings in these settlements are legally and owned by villagers who are also residents in most cases. Even though they can be treated as one form of informal settlements, these urban villagers possess relatively better housing conditions compared with slum dwellers. The issue of poverty is not at the forefront of such informal settlements and the need to improve settlements is not as urgent as that in slum-like settlements where basic human rights are at risk. Given that, the problematizing of ChengZhongCun actually latches on other issues, which I will demonstrate later. Since I argue that the issues of poverty and the lack of basic infrastructures and services are not the main concern of ChengZhongCun perceived by the governments in China, debating about whether legalizing property titles can encourage residents to improve housing conditions therefore seem not extremely applicable in this case.

However, as I mentioned before, the debate is relevant when we examine the counterarguments that scholars have offered. Kiddle (2010) in his article summaries critiques posed by Musembi (2007), which I believe serve as the basis for my argument that ChengZhongCun should not be treated as an ill to be cured but rather an informal but natural solution to a set of issues in China. Musembi mainly criticizes de Soto’s 1) the rigid binary opposition of informal illegality and formal legality, 2) other valid land tenure arrangements besides private ownership, 3) the existence of

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informal land markets, and 4) insecurity brought by legal titles (Kiddle 2010). The criticism essentially challenges the dichotomy of several kinds embedded in de Soto’s arguments. There are settlements and land tenure types that exist and operate which cannot be categorized in neither of the poles. This does not justify the approach he necessity of legalizing property titles so that these settlements are fit into the category that is assumed to be universal and efficient. It is on this basis, which is the challenge to the dichotomy view, that I want to raise the question of whether problematizing urban villages in China has its legitimacy. ChengZhongCun are an example of settlements and land tenure categories that are placed between legality and illegality and between formality and informality. In the next section, I will explain how ChengZhongCun is located between the poles by presenting its characteristics and argue that seeing ChengZhongCun through the extreme binary view impedes us from seeing reasons for its being. Following that, I will re-visit this argument by expanding on the reasons why ChengZhongCun continue to exist and how they function in cities, which ultimately lead to my argument that these urban villages contribute to the urban development in China which needs to be acknowledged and enhanced.

Defining property rights as a solution to ChengZhongCun? The previous debate on de facto and de jure security has its own version in China. Instead of

arguing for legalizing land titles or improving security of land tenure as a solution to informal/illegal settlements, many scholars have argued for defining property rights as a way to approach the issue of ChengZhongCun. As mentioned before, the informality of ChengZhongCun is different from what is commonly defined in English-speaking context and commonly observed in other developing countries. Wu (2012) equates the informality of China’s urban villages with property rights ambiguities and summarizes four sources of such ambiguity in his study. The first source is the dualistic and fragmented landownership. As mentioned before, the rural land where urban villages are located is collectively owned by the village whereas the urban land, after the massive land acquisition in the late 20th century, is owned by the state. Unlike the land use rights of urban land, the LUR of rural land cannot be leased to developers through the legal land market (Wu, Zhang, and Webster 2013). Under such dual landownership system, property rights of villagers consequently become unclear. One reason is that the allocation of the rural land follows a mixture of rules (the village committees and quasi market mechanisms) and transaction of rural land in the black market adds another layer of complexity to the issue (Wu, Zhang, and Webster 2013). The double-track system not only comes in the form of land ownership but also in the form of land management, which is the second source of the informality (Zhang, Zhao, and Tian 2003; Wu, Zhang, and Webster 2013). Specifically, the rural collective land is not subjective to the city’s master plan (Zhang, Zhao, and Tian 2003). Moreover, official management and development control don’t apply to the rural land either (Wu, Zhang, and Webster 2013). Because of the lack of regulations and its enforcement, low-quality rental housing in the village spread quickly and densely. Thirdly, public services and infrastructures are underdeveloped in these villages. In chengzongcun in Guangzhou, for example, most villages do not have sewerage systems and sanitation facilities and management are in general deficient (Liu 2002). In some cases, it is because the municipal government has no jurisdiction in these villages therefore has no responsibility for the provision of public goods in the villages (Wu, Zhang, and Webster 2013). Closely related to the previous source, the last dimension of informality comes from the status of village governance (Wu, Zhang, and Webster 2013). In addition to the fact that the municipal governments neglect investments in ChengZhongCun because the village committees actually own the assets, the reality that shareholding companies, rather than the village administrative governments, have the real control over the villages and provide basic

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social services makes the designation of responsibilities more ambiguous (Wu, Zhang, and Webster 2013).

Because of the ambiguities of property rights and consequently the lack of development control, villagers have gradually densified the urban villages by building higher and maximizing rental floor space to benefit from the rental housing market for migrant workers (Wu, Zhang, and Webster 2013). Though some form of regulations by the state have been applied to control village house building, they only stimulate a stronger wave of more house building (Wang, Wang, and Wu 2009). For example, the penalty fee was set for illegal constructions but it was so low that the policy actually encouraged landowners to build more illegal housings (Wang, Wang, and Wu 2009). As urban villages become densified and residential population increases, with a persistent lack of regulations, externalities of urban villages become evident which the governments and urban dwellers find unfavorable and problematic. It is believed that these problems partly result from the fact that a significant portion of renters in the villages are migrants who have no formal sources of income, official resident permits, or abilities to work (Liu 2002). Illegal clinics, gambling sites, and drug dealings are present in these places (Liu 2002). Authorities have also related the high crime rates in ChengZhongCun with the mixed backgrounds of residents living there (Song, Zenou, and Ding 2008). As mentioned before, sanitation problem is another major problem in ChengZhongCun. A lot of restaurants in these villages operate without food service permits, which creates public health concerns (Liu 2002). Consequently, ChengZhongCun is problematized because of different forms of informalities and externalities. To conclude, it has been commonly accepted that, as what Tian (2008) concludes, “the booming externality in ChengZhongCun is generated precisely by the lack of a clearly formulated contract and regulations, and by weak management.” It is based on this causal link that scholars have advocated for clear definitions of property rights, accordingly clear designations of responsibilities and better management of the land.

However, Anne Halia (2007) challenges the idea of defining property rights as the best policy to deal with the imperfect land market. Though her study mainly addresses the land market in China in general, the debate and her counterarguments to the “property rights” solution can still be applied in the case of ChengZhongCun. The argument posed by some Chinese scholars is actually similar to the argument by proponents of the legalization approaches mentioned in the previous section. For example, Zhu (2002) argues that “vaguely-defined property rights over urban land will leave valued assets in the public domain for competitive access, and inefficient land development due to externalities will be exacerbated as a result”. Though what we observe in ChengZhongCun are commonly deemed as examples of rent-seeking behaviors and over-utilization of resources due to ambiguous property rights, Halia (2007) questions such conclusion and demands more empirical evidence for the usefulness of defining property rights. In addition, Halia (2007) points out that too much attention has been given on economic and legal dimensions of the issue and brings our attention to social and political consequences of defining property rights. For example, defining property rights and developing real estate market may put the affordable housing to death (Halia 2007).

Despite the argument, Tian shows the success of property right reform through the Zhuhai model. The major component of the reform was to covert collective land into state land and several other policies were also in place to incentivize villagers to cooperate (Tian 2008). For example, villagers can get 1-1.2 times of their original floor space with legal titles after the conversion and they were also guaranteed to receive dividends from incremental land values and profits from former collective enterprises and properties (Tian 2008). In addition, they were located on the original site before developers constructed new commercial buildings (Tian 2008). Though the Zhuhai model successfully improve living conditions and quality of life of villagers, Tian did not acknowledge the fact that the city of Zhuhai has distinct features that allow the model to success whereas

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ChengZhongCun in Guangzhou and Shenzhen may not benefit from the model in the same way.1 The reason that economic incentives work in the case of ChengZhongCun in Zhuhai is because villagers do benefit tremendously from the policies after the conversion. Compared with Guangzhou and Shenzhen, Zhuhai is not an intensely industrialized city with a large job market therefore does not attract migrant workers as much as the other two cities. Consequently, villagers do not benefit from the rental economy that is prevalent in ChengZhongCun in the other two cities. Without this large source of income, villagers thus are easily convinced by what the city government offers and what the development can bring to them after the conversion. In Guangzhou and Shenzhen, however, such institutional reform does not guarantee a better result for villagers economically. In some ChengZhongCun in Shenzhen, villagers build elevators for the rising buildings and to accommodate the increasing number of renters. The reason they are willing to do so is precisely because the marginal return is extremely high. In short, the informal rental economy in ChengZhongCun “provides crucial income to landless farmers who would otherwise suffer from poverty and deprivation” (Wu, Zhang, and Webster 2013). Given that, it is unlikely that the Zhuhai model would succeed in these cities unless the city government is willing to pay the enormous amount of compensation to the villagers. In addition to the high monetary costs, the property right reform can also cause social instability and other consequences that are not evident in the Zhuhai model. The following section is going to address this issue and argues that the demolition of ChengZhongCun and the denial of its functions only expose larger social issues that are previously hidden by these urban villages.

ChengZhongCun as a solution

The discussion so far has mainly focused on villagers’ rights and interests. However, during

the discussion and the process of redeveloping ChengZhongCun, the most effected group, rural migrants, is often disregarded. Rural migrants are population who own rural residence status but migrate to the city usually for employment opportunities. They are essential to the operation and development of the city and they always shoulder labor-intense, dirty, and dangerous jobs. Despite their importance, their interests have not received proportionate attentions during the discussion of ChengZhongCun and in past redevelopment projects (Zhang, Zhao, and Tian 2003). Two interconnected social issues in China are relevant here. One is the shortage of affordable housing for rural migrants and the other is the rural-urban dichotomy and disparity.

In their study of the role of urban villages in housing rural migrants, Song et al. (2008) mention two main sources of the shortage facing rural migrants. The first is that urban commercial housing is too expensive for low-income rural migrants to afford. The privatization and commercialization of urban housing since the reform completely overlooks the need of low-income groups (Zhang, Zhao, and Tian 2003; Song, Zenou, and Ding 2008). Secondly, rural migrants’ access to urban housing is limited by the system of residence registration (HuKou 户口) (Song, Zenou, and Ding 2008). Every person in China is classified as a member of either agricultural (rural) population or the non-agricultural (urban) population and social welfare, such as the access to affordable urban housing, are closely associated with residency through this system (Wu 2006; Wang, Wang, and Wu 2009). For example, rural migrants do not have required urban residence status therefore can not acquire more affordable units provided by the recent urban housing provisions system (Song, Zenou, and Ding 2008). Though the other two affordable housing programs, low-cost renting (LiangZuFang 廉租房) and the Housing Provision Fund (HPF) (GongJiJin 公积金), do not require a

                                                                                                               1  Information collected from Xinyu Liang, who is a local resident in Zhuhai and also quite familiar with ChengZhongCun in the region.

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local urban HuKou, a significant portion of rural migrants still can not benefit from the programs because of either the scarce supply (low-cost renting) or ineligibility due to their employment status (HPF) (Song, Zenou, and Ding 2008). The HuKou system plays a fundamental role in the rural-urban dichotomy in China. The double-track system of land policy mentioned in previous sections is an example of such dichotomy. Other dimensions of the dichotomy are also persistent in the society today and the access to urban housing is one of them. The dichotomy in this case, and many others, has developed into the rural-urban disparity with rural population constantly receiving discrimination and disadvantages and it further intensifies as rural-urban migration is growing rapidly.

In short, both financial and institutional constraints limit rural migrants’ access to urban housing. It is under this rationale that ChengZhongCun become the affordable shelters for rural migrants and the rental economy in these villages burgeons and flourishes. Empirical evidence has shown that rural migrants without urban HuKou are very likely to live in ChengZhongCun and they are usually less-educated, self-employed, and temporary residents who earn limited wages (Song, Zenou, and Ding 2008). The concentration of underprivileged population reveals the government’s failure in responding to their needs. What is worse than the fact that the government is only concerned with the impacts of ChengZhongCun on the image of the city is that authorities constantly link undesirable living conditions and social disorders in urban villages with identities of rural migrants. Statements hidden in those past policies seem to be that the problems lie in the people who live there and the government only fails in not clearing them out. Therefore, ChengZhongCun are commonly stigmatized in the society. Increasingly it is forgotten that why rural migrants choose to live in ChengZhongCun in the first place: they are marginalized in the system and ChengZhongCun welcomes them by providing them affordable housings. Urban villages and the rental economy thus are a natural reaction and an effective solution to the social issues resulted from increasing rural migrant population and the existence of a discriminatory system. Since ChengZhongCun are housing the population who are excluded from other urban housing options and amenities in the city, the demolition of ChengZhongCun or inattentive re-development of them will potentially expose the population to a worse living condition by concentrating them in remaining urban villages. Without policies in place that address housing needs and rights of rural migrants, any redevelopment strategy of urban villages is only prolonging the outbreak of the ill.

Conclusion

Through the analysis, I have shown that the dichotomy lens of informal illegality and formal

legality is inappropriate in the world with a wide continuum of housing settlement types and land tenure arrangements. ChengZhongCun in China is an example of informal settlements with unique characteristics. The dichotomy lens leads to the problematizing of ChengZhongCun and through this lens we only see it as a product of an imperfect system. Through the critiques on social outcomes associated with the rural-urban dichotomy and disparity, I argue that we should see ChengZhongCun as a solution to an imperfect system and its outcomes. The strategies in dealing with externalities in these urban villages should therefore focus on providing more housing options to the people in need rather that beautifying the image of the city at the expense of rural migrants’ last shelters.

As the urbanization in China continues and rural-urban migration grows, the gap between the housing needs of rural migrants and the availability of affordable housing will widen if no policy that properly addresses housing shortage for rural migrants is in place. As what Song et al. (2008) suggest, we should promote strategies that aim at serving rural migrants and help the dispersion of poverty rather than policies that encourage the concentration of these groups in small geographical areas and thus urban segregation.

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