Micro-Scale Urban Renewal in Shenzhen's Urban Villages

Embracing the village: Micro-scale urban renewal in Shenzhen’s urban villages

Co-Supervisors: Prof. Marco Bontje & ChingWen Yang Second Reader: Sara Özogul MSc. Urban and Regional Planning Graduate School of Social Sciences, University of Amsterdam Submission date: 6th July 2018

ABSTRACT

Urban villages, a product of Shenzhen’s rapid urbanisation face the constant threat of urban renewal. Current research is primarily concerned with how these informal slum-like settlements are typically renewed under a demolition-reconstruction model resulting in the widespread displacement of their inhabitants. However, more recently smaller-scale interventions in the form of the renovation and the protection of urban village environments have emerged. This research labels these interventions as ‘micro-renewal’.

This thesis provides an in-depth analysis of micro-renewal by answering the research question: ‘What are the aims and effects of micro-scale urban renewal projects in the urban villages of Shenzhen?’ Data was collected through interviews and document-based analysis in three case studies: Gangxia, Xinweizai and Nantou urban villages. Four types of micro-renewal were identified: landlord-developer initiated, developer initiated, govern– ment initiated and not-for-profit initiated. The aims of the first three micro-renewal types are to generate financial profits through the renovation of the housing stock, provision of services and the use of culture as an economic development tool. The main effect of this is the displacement of existing residential and business tenants. The aim of not- for-profit initiated projects is to include residents in a public participation process in the provision of new public spaces. This has resulted in residents becoming an active interest group in micro-renewal projects with varying degrees of success.

Keywords: China, Shenzhen, urban renewal, micro-renewal, urban villages, displacement

ACKNOWLEDGEMENTS

I would like to thank the Shenzhen ‘squad’ Bert, Bryony, Denise, Feija and Xiaoli for making the China experience such a fun and memorable one. There was never a dull moment and they were always on hand for support during the research.

I also wish to thank Miranda and Jeff for their invaluable translation during interviews and Sheila and Vincent for introducing us to Shenzhen’s karaoke scene!

I also want to express my gratitude to all the respondents for taking the time to speak to me. This thesis could not have come to fruition without their knowledge.

Finally, I would like to thank my thesis supervisors Marco and Chingwen for organising the introduction week and helping to guide this research from start to finish. It truly was an incredible learning experience and an enjoyable year of study.

Luke, July 2018

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TABLE OF CONTENTS ABSTRACT ...... ii ACKNOWLEDGEMENTS ...... iii FIGURES ...... vi TABLES ...... vi CHAPTER 1: INTRODUCTION ...... 1 CHAPTER 2: THEORETICAL FRAMEWORK: The life course of urban villages...... 4 2.1 Urbanisation (1949 – 1979) ...... 4 2.2 Shenzhen Special Economic Zone...... 5 2.3 The Role of the dual land system and Hukou ...... 6 2.4 The Urban Village ...... 7 2.5 Understanding urban renewal...... 10 2.6 Urban village renewal ...... 11 2.7 Micro-renewal in Shenzhen ...... 13 2.8 Conclusion...... 14 2.9 Conceptual Scheme...... 15 CHAPTER 3: RESEARCH QUESTIONS, DESIGN AND METHODOLOGY ...... 21 3.1 Research Questions...... 21 3.2 Research Design: Case Studies ...... 22 3.3 Research Methods ...... 26 3.4 Data Analysis ...... 28 3.5 Limitations ...... 29 CHAPTER 4: RESULTS ...... 30 4.1 Types of micro-renewal in Shenzhen’s urban villages ...... 30 4.2 The values of the stakeholders ...... 40 4.3 The changing viewpoint of the government...... 45 4.4 The effects of micro-renewal ...... 47 4.5 The winners and losers of micro-renewal...... 51 CHAPTER 5: DISCUSSION ...... 55 5.1 The intervention of micro-renewal ...... 55 5.2 Redefining the roles of the stakeholders ...... 55 5.3 Gentrification through micro-renewal...... 56 5.4 Re-evaluating the conceptual scheme ...... 57 CHAPTER 6: CONCLUSION ...... 59 6.1 The aims and effects of micro-renewal...... 59 6.2 Recommendations for future policy ...... 60

6.3 Recommendations for further research ...... 61 6.4 Reflection ...... 62 BIBLIOGRAPHY ...... 63 APPENDICES ...... 66 Appendix 1. Interview guides ...... 66 Appendix 2. List of documents analysed...... 68

FIGURES

Figure 2.1 Location of Shenzhen. 6 Figure 2.2 Administrative districts of Shenzhen. 6 Figure 2.3 Residential 'handshake' buildings in Baishizhou with commercial units on the ground floor. 9 Figure 2.4 Narrow streets in Hubei. 9 Figure 2.5 Conceptual model. 16 Figure 3.1 Research sites 23 Figure 3.2 Boundaries of Gangxia West (already redeveloped) and Gangxia East (research site) 24 Figure 3.3 Xinweizai research site. 24 Figure 3.4 Nantou research site. 25 Figure 4.1 Exterior images of Loft 1980 31 Figure 4.2 A bedroom in Loft 1980 32 Figure 4.3 Images of the rainwater harvesting device at Loft 1980 32 Figure 4.4 Exterior images of Port Apartment 33 Figure 4.5 Interior images of Port Apartment 33 Figure 4.6 Map of Nantou. The green areas represent public spaces and the purple areas represent historical buildings. 35 Figure 4.7 Baode Plaza before renovation 36 Figure 4.8 Baode Plaza after renovation and construction of B3 and B4 36 Figure 4.9 The renovated factory buildings and workers dormitories 36 Figure 4.10 The historic East Gate 37 Figure 4.11 Examples of street art installed in Nantou for the UABB 37 Figure 4.12 The four modular units installed by SCD. The bottom right image shows the remaining unit 39 Figure 4.13 Map of Shenzhen. The red dots represent current Vanke projects. The orange dots represent urban villages in Shenzhen. 43 Figure 5.1 Revised conceptual scheme 58

TABLES

Table 3.1 List of Interviews 27 Table 4.2 The physical, economic, social and environmental effects of micro-renewal 48

CHAPTER 1: INTRODUCTION

We will formulate an overall plan for renovating villages in urban areas as well as supporting policies for categorising their renewal or renovation.

We will put great effort towards rectifying the problem of dirty, disorderly and dilapidated urban areas.

Thus creating new villages that are safe, clean, orderly and harmonious.

(Excerpts from Chen Rugui, 2018)

In 2018, mayor of Shenzhen Chen Rugui reiterated the stance of the government towards urban villages, characterising them as an urban tumour that must be removed. Shenzhen, the poster child of China’s economic success has grappled with the problem of urban villages since their emergence following the Reform and Opening in 1979. Shenzhen, the first of seven initial Special Economic Zones grew at an incredible pace from an influx of capital and labour. Over the course of forty years, Shenzhen has evolved from an agricultural and fishing based region of 300,000 inhabitants to a “factory of the world” and subsequently, into a high-tech global metropolis with 20 million residents. However, alongside the growth of the planned city unplanned and chaotic urban environments grew in parallel. These are known as urban villages, villages-in-the-city or chengzhongcun.

Urban villages are informal urban developments, constructed by Shenzhen’s indigenous villagers outside of the planning regulatory apparatus of the state. They are typified by their appearance –– dense clusters of poor quality buildings (containing housing, factories and commercial units) and a degraded environment. Since their development they have served as low-cost housing for migrant labour. They are spread across the city with some occupying high land value sites in central locations and are estimated to house half of Shenzhen’s population (O’Donnell, 2017). Since 2004, these slum-like environments have felt the brunt of the government's desire to rid the city of perceived physical, social and environmental ills in order to create a ‘world class city’ (Bach, 2017). A demolition and reconstruction model of urban renewal has been prescribed by the government and the market to remove these problems and rebuild the villages as part of the formal city. Many of the centrally located urban villages have been removed already, influenced by the large rent gaps between an urban village and formal development.

The demolition-reconstruction model has faced criticism for causing the displacement of residents, the loss of employment and the destruction of historical buildings (O’Donnell, 2017). It is also viewed as a time-consuming and costly endeavour (due to negotiations with building owners around compensation) from the perspective of the government and real- estate developers (Lin et al. 2015). In light of this new approaches to urban renewal are emerging that focus on the renovation and preservation of the fabric of urban villages. This research labels these approaches as micro-renewal.

The objective of this research is to critically assesses these new micro-renewal approaches and examine to what extent they offer a more appropriate alternative to the demolition- reconstruction model. The research is guided by the question:

What are the aims and effects of micro-scale urban renewal projects in the urban villages of Shenzhen?

In order to answer the question, this thesis takes a multi-case study approach and explores micro renewal projects in three urban villages in Shenzhen: Gangxia, Xinweizai and Nantou Old Town. Data was collected during fieldwork in March and April 2018 in the form of interviews and document analysis. The research describes the projects and explores the motivations of the stakeholders in opting for micro-renewal. It then draws on urban renewal literature and assesses the projects based on their physical, economic, social and environmental effects. Based on this, the research then attempts to identify the main beneficiaries of micro-renewal as well as those that are disadvantaged by it.

This thesis has an academic relevance as few English language studies have been enacted on the subject of micro-renewal projects and their aims and effects. Much of the current literature is concerned with the development of urban villages (see Chung, 2009; Wang et al. 2010 and Zhan, 2018), the housing conditions of the residents (see Wu, 2016), the governance of urban renewal (see Lin et al, 2015), and the consequences of the demolition- reconstruction model of urban renewal (see Liu Y., 2017). Qianyun Lui (2017) researched the preservation of traditional villages by examining the perspective of the “third sector communities.” These are non-governmental groups that are pushing for alternatives to the demolition-reconstruction model and promoting the preservation of cultural heritage. Rather than focusing on the resistance to demolition, this thesis focuses on actual micro- renewal projects that have been implemented. As such, it addresses the dearth of knowledge on micro-renewal in Shenzhen’s urban villages.

By shedding light on the possibilities of micro-renewal schemes in urban villages this research has a social relevance. Urban villages do have problems that need addressing and the default demolition-reconstruction solution is not always suitable and often leads to more problems stemming from the widespread displacement of residents. Micro-renewal may be a more appropriate tool in certain contexts to bring about a lasting improvement to the physical environment and lives of the residents. This research may encourage policymakers and stakeholders to re-assess their redevelopment plans and bring micro- renewal strategies to the decision-making table.

This thesis is structured as follows: Chapter two elucidates the theoretical backdrop to this research and draws on the literature fields of Chinese urbanisation, special economic zones and, urban renewal as well as introducing micro-renewal in the context of Shenzhen. Chapter three explains the research questions, then describes and justifies the research design. Chapter four presents the results of this research. Chapter five discusses the results in relation to the theoretical framework. Chapter six concludes the research by answering the research question, offering policy and research recommendations and reflects on the research process.

CHAPTER 2: THEORETICAL FRAMEWORK The life course of urban villages

2.1 Urbanisation (1949 – 1979) In order to understand the effects of micro-renewal projects in urban villages, it is necessary to understand their development through the lens of urbanisation. Urbanisation is the process through which rural communities become urban. Globally, the distribution of people living in towns and cities is rising compared to their rural counterparts. In China, over 500 million people have decamped from the countryside to cities over the past 40 years (Roxburgh, 2017). This rapid rate of migration has transformed the landscape of China. The story of modern Chinese urbanisation can be explained in two phases. The first is the communist period under Chairman Mao (1949–1979) when the growth of cities was heavily restricted by the government. The second is the era following the Reform and Opening of the Chinese economy in 1979. This established a number of coastal free trade zones including the Shenzhen Special Economic Zone. This spurred an incredible growth in cities never before witnessed in Chinese history. Urban villages are a feature of this period of unrelenting urbanisation.

The newly formed People’s Republic of China in 1949 took a different approach to cities than previous administrations. Chairman Mao conceived cities as spaces of excessive consumption and revered the rural way of life. For this reason, the size of cities was tightly controlled and they were re-conceptualised as spaces of industrial production (Chung, 2009). Wu (2015: 39) argues that at this time urban planning was not a regulatory tool to minimise ‘the negative externalities of land use in the market economy or balance conflicting interests’ like it was in the West. Instead, it was solely geared towards supporting industrial production and providing housing to the workers in the cities (ibid.). Attention was focused on developing industrial bases in the cities of the interior while coastal cities were largely ignored (Wu and Gaubatz, 2013). Rural areas became centres of food production to support the industrial bases (Wang, et al. 2009).

The focus on industrial cities spurred an initial growth in urbanisation rates –– the percentage of the population living in cities doubled between 1949 and 1960 (Wu, 2015). However, after 1960 urbanisation rates levelled off for the following two decades. This is attributed to the failure of the Great Leap Forward (1958–1960) and the Cultural Revolution (1966–1976). The former was an attempt at rapid industrialisation and the

4 collectivisation of rural communes while the latter saw an estimated 14 to 17 million urban youth moved to the countryside to be re-educated with rural ideals (Wu and Gaubatz, 2013). By 1980, the urban share of the population stood at 20% (ibid.). Since 1980, urbanisation has grown at a phenomenal rate and as of 2016, 57.4% of the population reside in urban areas as a result of China’s Reform and Opening (Wenyu, 2017).

2.2 Shenzhen Special Economic Zone The Shenzhen Special Economic Zone (SEZ) was established in 1979 and marked China’s first step into the opening of the economy (see figure 2.1). The SEZ covered an area of 392 square kilometres comprised of the four districts of Yantian, Luohu, Futian and Nanshan (see figure 2.2). Shenzhen was selected to be a ‘window’ to the outside world and was designated as an experimental site for free trade policies alongside the importation of foreign capital, expertise, science and technology (Ng and Tan, 2004). Shenzhen was chosen in order to take advantage of its links to Hong Kong in hopes of attracting overseas investment. It was a green field site with only two urban settlements of note; Luohu, which was a border town and a customs checkpoint for Hong Kong, and Shenzhen Old Town (ibid.). As well as this, there was a string of small towns and villages serving the predominantly rural population.

The archetypal narrative of Shenzhen is that of a cluster of sleepy fishing villages that were transformed into a global metropolis. The SEZ spurred an expeditious growth in the manufacturing industry as it was an export-led economy. This earned Shenzhen the moniker “factory of the world.” In 1993, the outer districts of Bao’an and Longgang were brought under the municipality of Shenzhen. The rapid growth in industries and construction required an influx of workers to sustain it. The population grew from 300,000 in 1980 to its official population of 15 million today. In 2016, the government recognised the actual population of the Shenzhen administrative region to be around 20 million (O’Donnell, 2017). The workers pouring into the city needed access to cheap housing but the dual land system and Hukou acted as barriers to them entering the formal housing market.

Figure 2.1 Location of Shenzhen (Source: by author)

Figure 2.2 Administrative districts of Shenzhen. The red districts represent the original SEZ. (Source: adapted from O'Donnell, 2013) 2.3 The Role of the dual land system and Hukou China’s dual land system and the Hukou are two institutions that are closely intertwined with the development of urban villages. After the establishment of the People’s Republic of China in 1949, land was nationalised. Urban land was held in the possession of the state and rural land ownership was passed to collectives (Liu, Y., 2017). This prohibited the selling, leasing or transferring of land within the market and created a rural-urban land dichotomy. Subsequently, the Hukou (or household registration system) was implemented

6 in 1958 and was designed to restrict internal population movement (Wu and Gaubatz, 2013). The Hukou issues two forms of citizenship according to an individual’s birthplace, either rural or urban. A rural Hukou allocates the ownership of agricultural land to a collective of rural citizens. These rural citizens are responsible for their own welfare, housing and employment (ibid.). Under an urban Hukou, a citizen has no rights to the land but instead can access social welfare programmes available in the city, such as local schools and public housing (Liu, Y., 2017).

These institutions allowed the indigenous villagers of Shenzhen to retain their full rights of land ownership. As a result, the only way for rural land to be transformed into urban land was through the state acquiring rural land from the village collective. Typically, the government requisitioned farmland from the villagers through financial compensation. The government did not seek to obtain the existing buildings of the villages as it would entail higher rates of compensation and the need to relocate the villagers (Hao et al, 2012). As well as this, Wu (2018) contends that there was a common practice of leaving a small amount of farmland to the village collective as part of their compensation. The newly established Shenzhen government was financially weak at the time and lacked the capacity to provide employment to the mostly uneducated villagers (Wang et al, 2009). Due to the loss of farmland, villagers were losing their livelihood, so they took advantage of their rural Hukou and land ownership rights. They quickly transformed their existing buildings and remaining farmland into residential developments consisting of densely constructed apartment blocks. The villagers became landlords and in doing so found a new source of income.

The Hukou status of incoming rural migrants to Shenzhen denied them access to the formal housing market. In the 1980s, restrictions on rural-urban migration were relaxed allowing migrants to flood into Shenzhen to provide cheap manpower for the flourishing new industries (Liu, Y., 2017). Urban villages served as an accessible low cost housing supply for the migrants. Over time, these migrants were described as part of a ‘floating population’ as they were not registered as resident in Shenzhen (Bach, 2017).

2.4 The Urban Village The Shenzhen Special Economic Zone, the dual land system and the Hukou paved the way for the development of what we now understand as chengzhongcun, villages-in-the-city or urban villages. The construction of urban villages existed outside the formal planning structures of the state. Wang et al. (2009) provide an in-depth overview of the repeated

7 failures of the regulatory apparatus of the government to control urban village development since the 1980s. Typically, new regulations on building heights and plot size had the opposite effect, increasing the speed and scale of development rather than controlling and limiting it. The villagers both individually and collectively through village committees continued to build taller and denser buildings as the potential rental income streams far outweighed the financial penalties (ibid.). In 1992, the village committees were disbanded and formed into shareholding companies. In doing this, the government took control of the remaining undeveloped land and in return, the village landlords were bestowed with an urban Hukou (ibid.). Urban villages are often described as a ‘third space’ in China’s dual land ownership system (Yan, 2018). They are neither fully village nor city –– they maintain their rural organisation but are woven into the fabric of the city.

The absence of planning controls and the villagers’ desire to maximise profits has led to the unique physical character of both the buildings and streetscape of urban villages. They are dense clusters of poor quality buildings typically ranging from five to ten stories in height. The bottom floors often contain commercial spaces while the upper floors are in residential use (see figure 2.3). The exceptionally narrow spaces between the buildings have given rise to the labels ‘handshake buildings’ and ‘kissing buildings’ (see figure 2.4). Apartments are typically small, cramped, in a bad condition and lack elevator access and separate kitchens. Nonetheless, apartments do also have some high level facilities such as air conditioning and internet access (Wu, 2016). The environment is also chaotic –– electrical wires criss-cross each other above the narrow passageways between buildings, fire safety and prevention is scant, drainage is inadequate and waste disposal facilities are sorely lacking. The physical composition of urban villages makes them easily distinguishable from the formal development of Shenzhen.

Figure 2.3 Residential 'handshake' buildings in Baishizhou with commercial units on the ground floor (Source: by author)

Figure 2.4 Narrow streets in Hubei (Source: by author)

The rapid urbanisation of Shenzhen has created over 300 urban villages and is estimated to house half the city’s population (around eight million people) (Lin et al, 2015). In terms of population composition, urban villages are home to migrant labour and a smaller population of indigenous villagers. Many migrants from the same rural regions cluster together in the same urban villages and maintain links to their hometowns (Wu, 2018). Initially, migrants were primarily employed in construction and in the newly developing factories of the city but over time the migrant labour group has become increasingly diverse. Today, urban villages house low income groups, graduates and high tech and

9 creative workers (Bontje, 2016). The urban villages also provide dense social networks which are a valuable resource in obtaining employment (Wu, 2018).

It is an oversimplification to describe urban villages as serving a purely residential function. Hao, et al (2012) challenged the notion of urban villages as ‘migrant enclaves’ in their study of land-use diversity. Residential land use does dominate urban villages but they also encompass a range of other functions including industrial (more common in outer districts), commercial and public services (ibid.). In many villages, the village collectives built factory buildings to be leased out to manufacturing companies. Many of the migrants have also found employment by establishing their own businesses within urban villages (Zhan, 2018). Schools, supermarkets, restaurants, hair salons, medical services and temples line the streets of urban villages.

2.5 Understanding urban renewal Urban renewal is used as vehicle to remedy the physical, social, economic and environmental issues of urban areas. It has its origins in the late nineteenth century when the idea of regulating capitalist cities took hold in North America and Europe (Hall, 2006). It was a government intervention designed to alleviate the problems of crime, dereliction, and poor health quality (stemming from disease and the lack of a clean water supply) perceived to be festering within working class slums. The response took a physical form through slum clearance and the provision of new higher quality housing. Since Victorian times, the remit of urban renewal has widened and it has become a core part of urban policy across the globe.

Defining urban renewal is challenging as it is a broad and ambiguous term that encompasses a range of theoretical perspectives and urban policies. It is further complicated by the fact the terms renewal, redevelopment, regeneration and revitalisation are both used interchangeably by academics, policymakers and practitioners and at other times, seen as separate concepts that share the common goal of making an improvement in an urban area. This thesis sits in the former camp and sees the terms as synonymous with each other. The definition of Roberts (2016: 18) has been appropriated for this thesis, outlining urban renewal as a:

comprehensive and integrated vision and action which seeks to resolve urban problems and bring about a lasting improvement in the economic, physical, social and environmental conditions of an area that has been subject to change or offers opportunities for improvement.

In this definition urban renewal is seen as both a reactive and proactive mechanism for urban change. It can be reactive by responding to problems such as building decay, crime, unemployment and social disadvantage. It can also pre-empt problems before they occur, for instance by anticipating a decline in an industry in an urban area and offsetting this by improving the area’s prospects by attracting private investment. Urban renewal may be specific to one location or connected to a wider city plan to attract new businesses and private investment. Roberts (2016) stresses how the causes of urban problems are often multifaceted and states that it can be difficult for policymakers to draw out a single causal problem.

There are two notable omissions in this definition. The first is that urban renewal responses and policies can also be based on perception rather than reality. Hall (2006: 60) recognises that policymakers or practitioners will act on what they ‘think, or want to believe, is causing the problems they observe’ and not necessarily on the actual issues. Secondly, Hall (2006) contends urban renewal is strongly tied to local geographical, historical and ideological circumstances. The geographical context refers to the specific urban area and its characteristics. The historical context reflects the past developments and urban renewal policies. The ideological context is related to the wider political environment, for instance whether the urban renewal should be enacted by the state or left to private developers or non-governmental organisations.

Urban renewal by its very nature is an interventionist activity. Traditionally, the interventions into the market were state-led and from a top-down perspective. The government acted as the key decision maker. Nowadays, it is typical for urban renewal projects to be managed by both the public and private sectors. Harvey (1989) contends that, since the 1970s, urban renewal has become less state-led as funding to local governments has reduced. As a consequence, urban governance is now more entrepreneurial –– the public and private sectors enter into partnerships with the private sector providing much of the funding. Urban renewal can also take a bottom-up perspective. Community organisations and grassroots initiatives have been used to improve the situation for residents.

2.6 Urban village renewal In China, urban renewal is concentrated on San jiu meaning the ‘three olds’ (Liu Y., 2017). The three olds refers to three types of urban land: old factory areas, old inner city areas and

11 urban villages (ibid.). Urban renewal is a reactive intervention for both the real and perceived problems that exist in urban villages.

The process of renewal is complex and encompasses a web of different stakeholders who each have their own interests. The three main stakeholders are the government, developers and the villagers (the landlords). Zhou et al. (2017) place the government as the key decision maker for urban renewal projects in China. The role of the government is to set the agenda through decision-making, site selection and choosing how urban renewal will be implemented. Real estate developers then implement the project based on this governmental framework. Conversely, Yi et al. (2017) maintain that the developers are the main decision makers. In their scenario, governments merely act as an ‘instigator’ while developers propose the plans, provide the bulk of funding and seek to maximise financial profits. O’Donnell (2016) importantly notes that the ideological position of the government towards urban renewal tends to be deliberately vague and open to interpretation, allowing urban renewal to be co-opted by the interests of the market. Furthermore, in a Chinese context the boundaries between the government and developers are blurred. Many real estate developers are state-owned or the government is the largest shareholder in the company. For instance, the majority shareholder of China Vanke, one of China’s largest developers is the state owned Shenzhen Metro Corporation (Vanke, n.d). It is also common for members of the Communist Party to sit on the boards of many Chinese companies. This blurring of public and private sectors make it difficult to delineate the differing views of the market and state.

While the government and developers can be argued to take the same viewpoint towards urban renewal, the villagers as property owners also have considerable influence in the decision-making process. Villagers individually or within the village shareholding companies own the rights to the buildings. Renewal projects must compensate this group. The residents (who are primarily migrants) have little influence in the process. Many tenancy contracts are verbal allowing them to be easily evicted (Wu, 2016). Liu. Y (2017) labels tenants as an ‘invisible’ group in the eyes of the government, developers and landlords.

Since 2004, urban renewal has become a dominant policy in Shenzhen and has been of a top-down nature. The primary model of urban renewal is demolition-reconstruction. In this framework, urban villages are demolished and subsequently reconstructed into new districts comprising luxury housing, shopping malls and offices that blend into the formally

12 constructed city. Over 90% of completed urban renewal projects are estimated to have been undertaken in this fashion (Liu, et al. 2017). This is done to take advantage of the rent gap between the existing land values of urban villages and their potential following redevelopment (O’Donnell, 2017). This is most pronounced in central districts. The consequence of this is the displacement of the residents as they are priced out of the new developments. This process can be situated within the discourse of gentrification (see Liu., Y, 2017). This is due to low income residents being evicted to make way for new middle and higher income-residents. Hao et al. (2012) argue that urban villages become more mono-functional following demolition-reconstruction as they lose their industrial functions and low cost services.

Despite the dominance of the demolition-reconstruction model of renewal, many proposed projects are never realised. It is estimated that only a third of proposed projects are ever completed, illustrating a significant mismatch between plans and reality (Liu, et al. 2017). One reason for this is the high transaction costs involved in development. Identifying building owners, negotiating, and subsequently issuing compensation is an expensive and time-consuming process (see Lin, et al. 2015 and Liu et al. 2017). For instance, the completion of the demolition-reconstruction of the urban village of Gangxia West took over 10 years from the date the plans were announced (Village share-holding company interview, 2018). Liu et al. (2017) label the remaining 10% of urban renewal projects as both ‘comprehensive renovation’ and ‘functional retrofit.’ In this case, buildings are kept; they are renovated to a higher quality and the functions of the buildings may be upgraded. These projects come under the framework of micro-renewal.

2.7 Micro-renewal in Shenzhen Micro-renewal is the term applied by this research to urban village renewal projects that encompass the renovation of existing buildings (which may change the function of the building e.g. from residential to commercial), the preservation of building styles, street layouts and historical structures and improvements to public spaces and streets. Demolition-reconstruction is understood to be a large-scale intervention as a significant portion or an entire urban village may be levelled in a single project. Micro-renewal is a smaller-scale intervention that can be limited to a single building, street or public space. As a result of this small scale, demolition is either not used or its use is severely restricted. Micro-renewal also allows building owners to maintain their rights to their buildings as they are not demolished.

Micro-renewal as a viable alternative intervention for the problems in urban villages has gained traction partly as a result of the greater public awareness of the effects of demolition-reconstruction, notably residential displacement and the loss of Shenzhen’s historical fabric. A growing movement to protect and preserve urban villages has stemmed from what Q. Liu (2017) labels as ‘third sector communities.’ In Hubei urban village, demolition plans prompted a protest from architects, artists, urban planners and other social activists. Their rationale was to protect the historical three by eight street layout which dates back over 500 years (ibid.). The government has also recognised that there should be some preservation of the historical aspects of urban villages to a certain extent and renovation may be a suitable tool (O’Donnell, 2016). This is partly connected to the idea of developing cultural industries and tourism to renew urban villages. An example of this is the Dafen oil painting village which has been redeveloped and branded as a painting production and trading space. The government has been successful in developing a cultural cluster and attracting tourism but it has led to a substantial increase in rent which has priced out some former residents from the village and forced remaining workers to work long hours to afford their rental costs (see Li et al. 2014). Culture is also used as a urban development tool through Shenzhen’s Urban/Architecture Bi-City Biennale (UABB). This exhibition, which is typically held in former factory buildings is deemed by van Dulm (2017) to be a catalyst to regenerate former industrial areas. The 2017 UABB on the theme of ‘Cities grow in difference’ was held in an urban village for the first time. It explored the importance of unplanned urban spaces in Shenzhen’s development, further indicating an intent to avoid their demolition.

2.8 Conclusion The theoretical framework outlined the history of Shenzhen’s urban villages and exposed the objectives, stakeholder relationships and impacts of urban village renewal. The current situation of urban villages warrants an intervention but the downsides of the prevailing demolition-reconstruction model are well documented. Micro-renewal is presented as an alternative way of intervening in urban villages but there is a lack of scientific understanding of the purpose, aims and consequences of this approach. Protests by third sector communities, the desire exploit heritage to develop cultural industries and the high costs of compensation are suggested as motivating factors for micro-renewal. Nevertheless, the roles and motivations of the government, developers and villagers are ill-defined in a micro-renewal framework.

This research will address the knowledge gap on micro-renewal by examining micro- renewal projects in practice. Demolition-reconstruction is regarded by the literature to have one major consequence: displacement. However, as micro-renewal is a broad theory it may produce different results depending on the stakeholder governing the project. This research will assess the aims of micro-renewal and identify the stakeholders implementing the projects. It will unpack why stakeholders are enacting micro-renewal. The impacts of micro-renewal will be appraised via Roberts (2016) definition of urban renewal by examining the physical, economic, social and environmental impacts.

2.9 Conceptual Scheme (a) The model Based on the theoretical framework a conceptual scheme has been developed to help guide this research. This scheme illustrates the current knowledge of micro-renewal in urban villages based on existing literature.

Urban Renewal Pressures 1. Land shortage 2. Building Quality 3. Rent Gap

Large-scale demolition &

Micro-renewal reconstruction Large-scale demolition and

reconstruction

Public Space Residential Commercial Historic enhancement Renovation Renovation Preservation

Developer, landlord, Developer, landlord, Government, Developer, Landlord, government, not- business owners, developer, landlord, government, not - for -profit agency, government, not- not-for-profit for-profit agency, village shareholding for-profit agency, agency, village village shareholding company village shareholding shareholding company company company

Physical effects Economic effects Social effects Environmental effects

Figure 2.5 Conceptual model.

(b) Explanation of the concepts Urban renewal The central concept in this research is urban renewal. This is an ambiguous term that can be broadly defined as a vision and an action to address and resolve urban problems at a specific moment in time and in a particular urban area through physical, social, economic and environmental improvements (Roberts, 2016).

Urban renewal pressures This concept explains pressures that are influencing decision-makers to carry out urban renewal in urban villages. The pressures include but are not limited to: 1. Land shortage Due to geography there is lack of developable land in Shenzhen so the city needs to redevelop brownfield and under-developed sites in order to accommodate both a growth in the population and the economy. 2. Poor building and environmental quality The residential buildings are typically poorly constructed, have inadequate ventilation and lack sunlight and adequate fire safety. The environment can also be chaotic due to the tight spaces between buildings which make access for emergency services (notably fire engines) difficult and, there is also a lack of open public spaces and a lack of waste disposal facilities. This helps to create a negative image of urban villages. 3. Rent gap There is a considerable rent gap between existing rents and what could potentially be earned in a new development (O’Donnell, 2017). This is at its most extreme in urban villages in central locations such as those found in Futian and Nanshan and less pronounced in more peripheral districts.

Demolition vs. micro-renewal The urban renewal pressures lead to decision-makers then deciding how to renew an urban village. This intervention typically takes the form of either large-scale demolition- reconstruction or micro-renewal. These are two sub-concepts of urban renewal. It is important to note that these two methods of urban renewal are not mutually exclusive. Redevelopment projects can combine the full or partial demolition of structures as well as

17 the preservation and renovation of existing structures (the latter falling under the micro- renewal umbrella). 1. Large-scale demolition-reconstruction In this method of urban renewal an urban village is levelled, the residents are displaced and a new community is built from the ground up. 2. Micro-renewal This term encompasses the planning strategies that minimise the role of demolition in the redevelopment of urban villages. There is a focus on protecting and renovating the existing built structures (including historic buildings), preserving the layout of urban villages and improving public spaces. Building functions may change and building owners may keep their rights to the building.

Public space enhancement & beautification This concept covers changes made to the public areas of urban villages to make a more pleasant environment. This includes the repaving of streets, the removal of waste and old or damaged street furniture from streets and squares, the instalment of new street furniture and waste disposal facilities, the creation of new public areas for recreation, the repainting of public areas and the installation of street art and flowers.

Residential renovation This concept focuses on the renovation of existing apartment buildings in urban villages. It involves the updating of a building’s façade, fire safety, facilities and internal layout. The internal layout may be altered to increase or decrease the size of apartments and rooms. New windows may be installed to increase daylight. The total number of apartments may stay the same, increase or decrease depending on the changes made. The renovation may involve the displacement of the previous tenants and their replacement with new tenants.

Commercial renovation This concept is concerned with the renovation of commercial premises. This involves the installation of new shop-fronts, improved facilities and fire safety. It also may involve upgrading or changing the building function. For instance, a low-cost convenience store may be upgraded to a restaurant.

Historic preservation This involves the preservation and restoration of historical structures in urban villages. Historical structures are defined as temples, city walls, archaeological sites or buildings that have some sort of cultural value. They are significant for exemplifying the history of the Shenzhen region.

Stakeholders These are the actors that in some way influence urban renewal and urban policy. They decide where urban renewal is implemented (often based on the pressures), they design the renewal plans (choosing to what extent it will involve demolition or micro-renewal) and finance their implementation. The stakeholders can be part of the government (e.g. national and municipal governments, and state-owned institutions/companies), private sector (e.g. real estate developers, urban planning firms, landlords and the village shareholding company) or not-for-profit organisations. This research does not use the term non- governmental organisations as this a problematic term in China, as many not-for-profit companies are owned by or linked to the government in some capacity. Local residents may also have a stake if they are consulted during the development of renewal plans.

Physical effects These are the changes to the built environment (buildings, public spaces and historic structures) of an urban village as a result of a micro-renewal project.

Economic effects These are the changes related to rental prices (for residential and commercial tenants) and the closing down and opening of new businesses in an area.

Social effects These are changes related to the residents of the urban villages. This includes whether residents are displaced and examines if new inhabitants differ from past tenants in terms of profession and income level.

Environmental effects These are the changes related to improving the sustainability of an urban village. This includes any projects that seek to minimise pollution and the production of waste. It also encompasses efforts to increase recycling and the energy efficiency of building

CHAPTER 3: RESEARCH QUESTIONS, DESIGN AND METHODOLOGY

3.1 Research Questions What are the aims and effects of micro-scale urban renewal projects in the urban villages of Shenzhen? In order to answer this question, the following sub-questions are used to help guide this research.

Sub-questions:

1. What types of micro-renewal projects can be identified in urban villages in Shenzhen? This question intends to explore the different approaches to micro-renewal projects by examining the key stakeholders involved and the aims of their projects.

2. What are the value orientations of the stakeholders implementing micro-renewal projects in urban villages in Shenzhen? This question aims to identify the core values or principles behind the plans of the key stakeholders. It will analyse the intentions of the main stakeholders and determine whether micro-renewal is primarily motivated by new business opportunities, by the protection and preservation of the historic fabric of urban villages or by a concern to improve the lives of urban village residents.

3. To what extent have changes in government policy influenced the development of micro-renewal projects?

This question will examine if changes in government policy towards the property market and urban renewal have promoted micro-renewal in urban villages.

4. What changes can be observed from micro-renewal projects in urban villages in Shenzhen? The purpose of this question is to analyse the effects of micro-renewal in urban villages. In order to do this it will analyse the physical, economic, social and environmental changes or improvements made to an urban village as a result of a micro-renewal project.

5. Who benefits and who is disadvantaged by micro-renewal projects in urban villages in Shenzhen? 21

The rationale behind this question is to uncover which stakeholders or actors gain the most from a micro-renewal project. This could potentially be in the form of new income streams for landlords or developers or improved housing quality for residents. The question will also examine if there are stakeholders or actors that lose out from a micro-renewal project. This could potentially be in the form of residents or store owners being displaced.

3.2 Research Design: Case Studies

This is a qualitative and descriptive research study that intends to explain the aims and effects of micro-scale urban renewal projects through an empirical study of urban villages in Shenzhen. In order to answer the research question, three case studies were selected. The cases are the urban villages of Gangxia, Nantou Old Town and Xinweizai. The unit of analysis in this research are the micro-renewal projects found within the geographical boundaries of each of the three urban villages. There were two core reasons for the selection of the cases. Firstly, from a methodological standpoint both Bryman (2012) and Yin (2014) note the benefit of examining multiple cases over a single case is to substantiate a stronger theory. The comparison of three urban villages thus helps with generalising the theoretical opportunities for micro-renewal projects in Shenzhen in the future. The cases selected were each in a different district of Shenzhen and the projects were being realised by different constellations of actors with differing visions. A further benefit of comparing these projects is to determine whether the location (i.e. central or more peripheral) or the involvement of particular actors have an impact on the aims and effects of the micro-renewal project.

The second rationale for the selection of these cases was based on the resources available and the accessibility to the research sites upon arrival in Shenzhen. The initial awareness of projects and access points to respondents emerged from the introduction week in Shenzhen organised by the University of Amsterdam. We visited the urban villages of Nantou Old Town and Xinweizai which offered some initial contacts. I became aware of the project in Gangxia through a contact provided during this same week. Furthermore, in the case of Nantou, the Shenzhen Centre for Design (SCD) was involved in a micro-renewal project there. As the SCD provided a workplace for this thesis project, it therefore offered an entry point for potential respondents. Multiple case studies are more time-consuming than single case studies (Yin, 2014) so it was important to build on these initial contacts as the fieldwork period was just six weeks during March/April 2018. In terms of location accessibility, Gangxia was within walking distance of my accommodation in Shenzhen and

Nantou was easily accessible via metro. Xinweizai necessitated a longer journey as it is positioned in the outer districts of the city. The research sites are shown in figure 3.1.

Figure 3.1 Research sites (Source: by author) (a) Gangxia

Gangxia is an urban village in Futian, the central business district of Shenzhen. Gangxia is split into two sub-villages: Gangxia East (Heyuan area) and Gangxia West (Louyuan area). Gangxia West has already experienced the demolition-reconstruction model of urban renewal and is now lined with hotels, offices and luxury apartments. The focus of this research is on what remains of the Gangxia urban village –– Gangxia East (see figure 3.1). The private developer Glocal Republic has completed a single micro-renewal project here labelled “Loft 1980” which was analysed for this research.

Figure 3.2 Boundaries of Gangxia West (already redeveloped) and Gangxia East (research site) (Source: by author) (b) Xinweizai

Xinweizai is located in the Longgang district and is outside the original SEZ. It is referred to as an “IT village” as many of the workers of the neighbouring technology firms Huawei and Foxconn reside here. The real-estate developer China Vanke is currently involved in a renewal project to upgrade the housing stock and improve the public spaces.

Figure 3.3 Xinweizai research site

Nantou Old Town, a former walled city is an urban village in Nanshan. The history of Nantou dates back nearly 1800 years as it once served as the administrative and economic centre for the historic Xin’an County. In the 20th century, the opening of the Kowloon– Canton railway and the transfer of the county seat to Caiwuwei village in Luohu meant Nantou lost its role as a political and economic centre (O’Donnell, 2017). As a result of the Shenzhen SEZ, Nantou was transformed into an urban village and many of its historic buildings and structures were torn down in the process.

Today Nantou has 30,000 inhabitants and was the main exhibition site for the 2017 Shenzhen Urbanism/Architecture Bi-City Biennale (UABB). The theme of the exhibition was “Cities grow in difference” which celebrated urban villages as an integral part of the functioning of Shenzhen. As a result of the UABB, there have been a number of micro- renewal projects enacted in Nantou directly by the Nanshan District Government, UABB and developers in order to make it capable of hosting the exhibition. The exhibition has also attracted other actors seeking to use Nantou as an experimental ground for their own micro-renewal projects.

Figure 3.4 Nantou research site. (Source: by author)

3.3 Research Methods (a) Interviews

The primary data collection method was in-depth and semi-structured interviews. Interviews were selected as the availability of English language documents, both primary and secondary, on micro-renewal projects in China is scarce. The strength of interviews is they can have a narrow focus and be guided by the interviewer to glean relevant information on the research topic (Bryman, 2012). As I do not speak Mandarin it meant an interpreter was necessary to conduct most interviews. Nonetheless, where possible, when the respondent spoke English the interview was conducted in English. Most of the interviews were conducted at the research sites and some also involved a guided tour. The interviews varied in length. In total 10 long interviews and 24 short interviews were conducted for this research. Long interviews typically lasted between forty-five and ninety minutes. Respondents for long interviews were selected if they were a direct stakeholder in the micro-renewal projects or an expert on matters related to urban villages and urban renewal in the context of the three case studies. One general interview was conducted on urban renewal trends across Shenzhen while the other interviews were specific to the research sites. Some of these interviews were scheduled in advance through the messaging platform WeChat while other interviews transpired by visiting the research sites and accessing the respondents that were available to be interviewed on that day.

The short interviews generally took between five and fifteen minutes and were held with local residents, residents of the renovated buildings, local store owners and local landlords in order to investigate their perspective on micro-renewal the effects they have experienced or witnessed. In Gangxia local residents were approached in the space outside the Wen Temple, where many of respected members of the community and landlords socialise. In Xinweizai interviews were held with the residents of the renovated Port Apartment by waiting in the seating area in the lobby of the building and approaching the residents as they socialised here in the evenings after work. A conversation was also had with the owner of a neighbouring store and a street cleaner outside the building. Interviews were mainly held with store workers and owners in Nantou by purchasing something as a form of exchange or by waiting for a quiet moment so the respondent could be interviewed. The displaced traders were accessed through Fish, one of the key respondents. The list of interviews is presented in table 3.1. See appendix 1 for interview guides.

Table 3.1 List of Interviews.

General Name Role Organisation Interview type Huang Weiwen Urban renewal Institute of Building Long expert Research

Gangxia Name Role Organisation Interview type Randal Xie Co-founder and Glocal Republic Long and guided marketing director tour Anonymous **** Gangxia Long shareholding company Local landlords x3 **** **** Short Local residents x3 **** **** Short

Xinweizai Name Role Organisation Interview type Hong Kao Xinewiezai project Vanke Group interview and director guided tour

2nd follow up long interview Anonymous **** Vanke Long Port Apartment **** **** Short Residents x6 Local business **** **** Short owner x1 Local resident x1 **** **** Short

Nantou Name Role Organisation Interview type Wanting Employee Shenzhen Centre for Long Design Carrie Former UABB UABB and Nantou Long and guided employee & Co- Living Room tour founder Vonnie Researcher **** Long and guided tour Fish Researcher Institute of Building Long and guided Research tour Local business **** These business were Short owners x5 established prior to renovation

Displaced traders x2 **** **** Short New business **** New businesses Short employees x3 opened as a result of renovation

(b) Documents

An analysis of documents was also conducted as part of this research. Using multiple research methods helps to strengthen the construct validity of the results of research as it gathers more sources of evidence (Yin, 2014). In order to help answer the third research question that examines if changes in China’s national government policy or in Shenzhen’s government policy have promoted micro-renewal, and to acquire a better understanding of Shenzhen’s property market, a review of English language news articles and opinion pieces was undertaken. As the majority of policy documentation is in Chinese there was a reliance on these English language secondary sources. They were accessed through the search engine Google using keywords such as ‘Shenzhen property market controls’, ‘China rental market’, ‘Shenzhen house prices’ and ‘Shenzhen property restrictions.’ See appendix 2 for the list of documents and news articles analysed.

Two documents were also provided by interview respondents. The first was from the SCD about Nantou: Curating in Nantou: A case study of village/city co-existence and regeneration by Meng Yan, the curator of the UABB. Randal of Glocal Republic, in Gangxia provided a vision document about the company’s aims. It is in Chinese but was translated with the help of an interpreter.

3.4 Data Analysis In order to analyse the data, recorded interviews were transcribed. When handwritten notes were taken, the notes were typed out and summarised. This process happened directly after the interview was completed to maintain validity. The data collected from documents was also summarised. Following this, the data was coded. Codes were assigned to issues, opinions and topics in the data that related to the research questions. This was as Bryman (2012) asserts a continuous process of assigning and redefining codes to the data. This continued until I reached what Hennick et al. (2011) term the point of “saturation” where no more codes could be generated to satisfy the research questions. Subsequently, through thematic analysis the codes were grouped into themes. The themes of this research

28 included: stakeholder motivations, future plans, physical effect, economic effect, social effect, environmental effect, and government policy.

3.5 Limitations There are a number of limitations in the methodology adopted for this research. These are linked to the selection of case studies and the use of interviews. From the outset there is a bias in the selection of case studies. The case selection was based on the resources at my disposal upon arrival in Shenzhen.

There were four limitations in the use of interviews. Firstly, there was an inherent bias in the selection of interviews respondents. Respondents that were interviewed were those that were most accessible at the time of research. Secondly, due to the short time period of fieldwork, the number of long interviews is limited. Thirdly, not all relevant stakeholders were interviewed. Government officials were a particularly inaccessible group and the perspective of both the city government and district government is missing from this research. To overcome this, the government perspective is inferred based on the data collected from other respondents and the documents analysed. As well as the absence of government interviews, no interviews were conducted with the residents or the landlord of Loft 1980 due to time constraints. This was addressed by gathering this data from the interview with Glocal Republic. A final limitation is found in the interviews conducted through an interpreter. The research may be subject to errors in translation which means there may be some validity issues with the data collected.

CHAPTER 4: RESULTS This chapter will answer each of the sub-questions of this research. It begins by examining the types of micro-renewal identified by this research. Then the values of the stakeholders are reviewed before the changes in the government perspective towards urban renewal and urban villages are subsequently discussed. The effects of micro-renewal are presented in table 4.1. This chapter culminates by mapping out the actors that have benefitted and those that have been impoverished by micro-renewal.

4.1 Types of micro-renewal in Shenzhen’s urban villages The types of micro-renewal identified by this research have been defined according to the main stakeholder that instigated the project. There are four types of micro-renewal projects: (a) landlord-developer initiated, (b) developer initiated, (c) government initiated and (d) not-for-profit initiated found within the three research sites.

(a) Landlord-Developer initiated in Gangxia

“Loft 1980” is a single apartment building renovation project in Gangxia lead by the private developer Glocal Republic. This is one of seventeen ongoing and completed renovation projects by Glocal Republic in urban villages across Shenzhen and Guangzhou. Each of their projects has a theme and Loft 1980 is designed around a “sharing concept”. The interior design and layout of the building is inspired by the Japanese film Midnight Canteen, which follows characters enjoying a “sharing lifestyle”. Each tenant has a single bedroom and bathroom facilities and then there are four common areas shared amongst all tenants: kitchen, dining room, living areas, rooftop and laundry facilities. The sharing concept allowed the building to maintain the same number of rental units as prior to renovation. It also ensures rental costs are lower for tenants than if each of these services were provided individually and it is marketed as a way to encourage socialising amongst neighbours.

The renovation has introduced a range of physical and environmental changes to the building. The fire safety, building façade and physical quality have all been improved. More windows have also been installed to increase sunlight and to allow passers-by to peer in and ‘see what we are doing here’ (Randal, interview). The most novel feature of the renovation is a rainwater harvesting system that has been installed on the building rooftop. It is connected to Shenzhen’s ‘sponge city’ initiative as tool to capture rainwater and combat flooding. It was developed by Glocal Republic in conjunction with the American environmental NGO The Nature Conservancy.

Loft 1980 is classified as a landlord-developer initiated project due to the relationship of the two stakeholders –– GR and the landlord of the building. GR is a private real-estate developer that was established by a group of second generation Shenzhen citizens. The parents of the management team are all landlords; they are the villagers that built the handshake buildings following the designation of the Shenzhen SEZ. GR’s management team have now inherited the landlord duties and ownership of these properties from their parents. This has provided them with a business opportunity in renovation. In the case of Loft 1980, the GR management team do not own the building but they do have familial ties to the landlord.1 The landlord, interested in renovating one of their properties, approached GR due to the familial connection and the fact they had heard about their other projects. The landlord has leased the management of Loft 1980 to GR on a ten year contract to carry out renovations and rent out the property. The previous tenants were evicted and a higher rent is now charged to attract higher income tenants. This rewards the landlord with a higher income as well as no longer having to deal with tenant issues. GR guarantees rent to the landlord regardless of whether the property is at full occupancy or not. A condition of this contract is that the landlord cannot enter negotiations regarding demolition during this timeframe.

Figure 4.1 Exterior images of Loft 1980 (Source: by author)

1 The interviewee did not make clear what the connection was but confirmed it was familial. 31

Figure 4.2 A bedroom in Loft 1980 (Source: by author)

Figure 4.3 Images of the rainwater harvesting device at Loft 1980 (Source: by author) (b) Developer initiated The second type of micro-renewal can be described as a developer initiated project. This is the case in Xinweizai where the real-estate developer China Vanke is currently leading a widespread renovation and public space enhancement project. By the end of the fieldwork period only one of their building renovations had been completed and is fully operational. China Vanke has taken a twelve year lease from the owner of two buildings allowing them to renovate and manage the premises. Unlike GR, there is no familial relationship between China Vanke and the landlords of Xinweizai. The two buildings have been amalgamated into one unit and outfitted with 108 single-bed studios. The building is now part of Vanke’s ‘Port Apartment’ brand, a low cost rental housing service designed for young people aged between 18 and 35 years old. The current rent is between 800 yuan and 1350 yuan per month, the same as the surrounding buildings. Vanke operates under the guideline that the rent of a building will not increase following renovation. Vanke also guarantees the building owner will receive a 10% increase in their rental income from

Vanke every three years regardless of whether the building is occupied or not. It was not made explicitly clear during the interviews with Vanke if this increase would be passed on to the tenants in the future. Vanke are currently renovating the neighbouring buildings under the same platform as well as repaving the streets and enacting landscaping works. As a number of landlords are collaborating with Vanke, the company currently has the capability to renovate 50% of the buildings stock in Xinweizai. In the long run, Vanke intends to engage with more landlords and to renovate the entire village. No specific completion date was given.

Figure 4.4 Exterior images of Port Apartment (Source: by author)

Figure 4.5 Interior images of Port Apartment (Source: by author)

(c) Government initiated The third type of micro-renewal can be labelled as government initiated. This is exemplified in Nantou Old Town where the Nanshan District Government (NDG) has instigated micro-renewal through the hosting of the Urbanism/Architecture Bi-City Biennale. The UABB was held between December 2017 and March 2018. The NDG led a group of four actors to prepare Nantou to host the exhibition. These actors were representatives from the UABB, the planning and design firm Urbanus and a developer owned by the NDG. The projects implemented can be divided in two categories: (1) building renovation and new construction, and (2) public space enhancement. Under the first category, two former factory buildings and the neighbouring workers dormitories have been repurposed into the main exhibition halls. A permanent concert venue was also established on the same site. At the square Baode Plaza a marketplace was removed and two new buildings (named B3 and B4) were constructed to be used as additional exhibition sites. The NDG also evicted 20 stores across Nantou in order to use this floor space to introduce new businesses. One of these new businesses is a bookshop managed by the Nantou History Museum. The historic South and East Gates have been preserved. Within the second category the main streets have been repaved including Baode Plaza. Art projects (sculptures and art on the exterior of buildings) have also been installed to improve the visual amenity of Nantou.

The ambition of the NDG is to use the UABB as a springboard for the longer term renewal of Nantou. Since the end of the UABB all of the exhibition sites (the factory buildings, B3 and B4) have been empty. The plans for these buildings have not yet been finalised or made public. Despite this, some of the respondents had seen some of the initial proposals. The NDG intends to transform Nantou into a ‘Town of Design’ which will incorporate design offices, galleries, coffee shops and other services catering for a ‘middle-class market’ according to Carrie. The vacant exhibition sites will be repurposed for some of these uses. To realise this vision the government is also trying to attract investors and private capital to the twenty commercial units where the previous tenants were evicted. The private firm Villa has already converted a former apartment building in to a hotel catering towards tourists and business people visiting the neighbouring Shenzhen Hi-Tech Industrial Park. They have also established a cafe and co-working space in a separate building. Another investor has also established a bookshop, photo gallery and an artist’s residency in a single building.

Figure 4.6 Map of Nantou. The green areas represent public spaces and the purple areas represent historical buildings (Source: Vonnie, interview respondent)

Figure 4.7 Baode Plaza before renovation (Source: Fish, interview respondent)

Figure 4.8 Baode Plaza after renovation and construction of B3 and B4 (Source: by author)

Figure 4.9 The renovated factory buildings and workers dormitories (Source: by author)

Figure 4.10 The historic East Gate (Source: by author)

Figure 4.11 Examples of street art installed in Nantou for the UABB (Source: by author)

(d) Not-for-profit initiated

The final type of micro-renewal analysed in this research can be labelled as not-for-profit initiated projects. These are projects led by actors whose intention is not to profit financially from their action. Two such projects were identified in Nantou, one lead by the Shenzhen Centre for Design and the other by the Nantou Living Room. The research has avoided labelling these as non-governmental organisation initiated projects as the term NGO is problematic in a Chinese context. The SCD is a not-for-profit agency but it also is a government company. The NLR is not directly a government company but receives the bulk of its funding from the Nanshan District Government.

The SCD held a ‘community micro-renewal design competition’ to activate small open spaces in Nantou which lacked any infrastructure. It is part of a ‘redecorating agreement’ the SCD has with the local village committee. The winning design was a modular unit which contains wooden seating, flowers, poles to hang clothes and a waste bin area that is hidden from view by wooden doors (see figure 4.12). Four of these units were installed across the village. The SCD funded the design fees of the modular unit and the local committee funded the construction (who in turn received a beautification grant from the NDG). However, the units received little use from the residents with one respondent arguing:

The frame is bad because nobody wants to sit alone; it’s just a single seat. The only thing it is good for is some shade from the sun.

The residents engaged with the SCD and the designer through a public participation process. A small number of meetings were held with residents but there was little uptake. The final design also differed from the expectations of the residents that were consulted. The SCD concedes that the end result demonstrated a wide gulf between the visions of the designer and the needs of residents. The residents were not interested in using these units as they did not want to sit alone or sit beside waste bins. The materials of the units were also of a poor quality. The doors covering the bins had fallen off and the structure became dirty. Children were also climbing on them, raising safety concerns with parents. The local residents interviewed all had a disinterest in the project and according to Wangting, many of the residents viewed it as a nuisance. As a result, three of the units were removed just three months after they were installed. Only one unit remains as it is actively used and does not house any waste bins. Overall the SCD deems the project as a ‘failure’ and a ‘lesson’ for

38 both themselves and the designer. The SCD currently has no future plans for Nantou due to a lack of resources.

Figure 62 The four modular units installed by SCD. The bottom right image shows the remaining unit (Source: by author)

The Nantou Living Room (NLR) is a not-for-profit group that was established by a team of seven designers, architects and urban planners that previously worked for the UABB. They have completed one micro-renewal project and have three other ongoing projects. Their first venture was the renovation of a former Mah-jong space in the ground floor of a building. In conjunction with the UABB, they transformed this space into a one bedroom apartment. The project was funded by an interior design and furniture company in order to advertise their products. The apartment functions as a demonstration of what apartments in urban villages can look like if they are renovated. Since the UABB, it is primarily used as an office space for NLR and is rented out on Airbnb in order to pay the rent on the property. They have a second project in this apartment and intend to convert the overgrown garden behind it into a community garden space and venue for showing outdoor films. Their third project is the renovation of commercial shop fronts in Nantou. Three stores have had their shop-fronts

39 redesigned to attract more customers and they are in discussions with other potential clients. Their fourth activity has been the establishment of the ‘Old Town Forum.’ This forum is hosted together with the Nantou Street Office, the lowest level of government in Nantou. Its purpose is to allow residents express their views, complaints and ideas for the neighbourhood to the lowest level of government and to the Nantou Living Room.

4.2 The values of the stakeholders This section of the results draws out why each of the stakeholders has implemented micro- renewal projects and clarifies the principles guiding their implementation.

(a) Gangxia

We are the group that cares about urban villages.

(Randal interview)

GR frame themselves as the developer most aware of the importance of urban villages. The management team of GR have all been educated overseas and as the inheritors of the ownership rights of a number of apartment buildings in urban villages, they see it as their duty to create a positive impression of urban villages. They perceive themselves as more ambitious and business-savvy than their parents’ generation and in a position to demonstrate that urban villages can be improved through means other than demolition.

GR has two key values underpinning their projects. The first can be described as changing perceptions through cultural activities and development and the second as maximising their business interests. In the first case, GR asserts that the history of Shenzhen is found in its urban villages and efforts should be made to create positive impressions and offer new activities to the residents. Randal made reference to the fact that GR wants to ‘give something back to the community’. Alongside the physical renovation of Loft 1980, the building has been used as a platform for art and educational activities. In the summer of 2017, a Japanese artist was given a residency at Loft 1980 and held workshops with children and other residents of Gangxia. Some of this artwork was then exhibited at COCO Park, a nearby popular shopping mall as way of showing what can be can be produced in urban villages. The rainwater harvesting system is also used for educational purposes. Children have been invited to learn about how it operates, and the different plant species used as well as how they can be more environmentally conscious.

All of GR’s projects are ‘tailor made’ to reflect the history of their location and maximise their business interests. In Loft 1980 this involved the walls being decorated with historic images of Gangxia, past residents and the building prior to renovation. As well as this, the property is tailor made towards its new tenants: middle income workers. This market is perceived as both a way of maximising profitability for renovation and also garnering publicity for GR. This strategy of marketing towards middle income groups also serves to build up GR’s profile and demonstrate to prospective clients (landlords) that they can bring in higher income groups to urban villages. GR are seeking expansion through projects that involve the renovation of a whole block of buildings as well diversifying their business operations through establishing hotels, restaurants and sport facilities in urban villages. GR also wants support from the government in order to provide a more ‘standardised’ lower cost housing that is affordable to the lowest income groups. At the moment, they do not see this market as profitable.

The landlord in this instance is motivated by the capability of increasing their rental income without investing in their property. They also remove themselves from the responsibilities that accompany the role of a landlord. There is little regard for the previous tenants as new tenants can bring in a higher rental income stream. As the landlord has familial connections to GR, Randal described there being a level of trust between them which motivated the landlord to engage in this development.

(b) Xinweizai

At the time of this research the Xinweizai project is marketing rental housing towards young graduates and young professionals. The Vanke respondents noted that they see these young people as ‘middle income groups’ who want access to low cost rental housing and to live in close proximity to their employment but demand a better quality of services than is typically found in urban villages. They see huge market potential in this demographic across China. By the end of 2017, 30,000 Port Apartment units were completed with a further 70,000 units either in planning or under construction (Vanke, n.d.). Shenzhen is particularly attractive due to the abundance of urban villages which are often located near to major employment centres and public transport networks. The city also continues to attract young migrant labour from across the country.

The focus on young workers through the renovation of handshake buildings is the initial stage of a wider long-term business strategy for Vanke. Xinweizai project director Hong Kao explained their future goal is to:

become the largest operations service provider in Shenzhen’s urban villages. In the future, it will incorporate services like businesses, community activities, property management, kindergarten, industrial purposes and office purposes. Just like a little government.

At the moment Vanke are not making a profit in Xinweizai and will not expect to do so for another seven or eight years. As Vanke is partially owned by the government it means they have the resources to do this unlike other developers. In the future, Vanke plans to renovate and design apartments for families, higher income groups and develop group based housing for low income groups.2 After renovation, Vanke provides their own security, cleaning and maintenance companies. Judging by Vanke’s future ambitions it appears that the company no longer considers itself as a developer looking to sell units. At a media briefing in 2017, Vanke’s chairman Yu Liang expressed that ‘our time as a developer is gone’ (Hua, 2017). The company intends to be a service provider to residents who are leasing apartments in urban villages. Renovation as opposed to demolition is suggested as a more cost-effective of doing this. It also means the high density of urban villages can be maintained which is not always possible in a new development. Figure 4.13 shows the scale of Vanke’s ambitions. It shows Vanke’s current projects in Shenzhen and the locations of other urban villages where their Xinweizai project could be replicated if it is successful.

2 Vanke’s first low income group based housing complex will be completed in July 2018 in Futian, Shenzhen. It is designed for cleaners.

Figure 4.13 Map of Shenzhen. The red dots represent current Vanke projects. The orange dots represent urban villages in Shenzhen. (Source: image taken by author at Vanke's Xinweizai office)

Vanke describes themselves as ‘a partially state owned company [with a] social commitment to get engaged and make a contribution.’ They perceive themselves as having a responsibility to serve the people. However, this project has done little to benefit the existing residents of Xinweizai and has led to the displacement of the previous tenants. More residents will be displaced as the project progresses unless housing is made available to the displaced residents at the same rental price following renovation. As it stands, based on Vanke’s current work and future ambitions they are purely motivated by business interests in micro-renewal projects.

The landlords that are leasing the properties were described by Vanke as ‘second generation’ –– they are the children of the villagers that transformed Xinweizai into an urban village. Vanke argues that this group is more interested in ‘making money’ and ‘enjoying life’ rather than undertaking the management responsibilities for their properties. By offloading their responsibilities to Vanke they can enjoy life and receive a higher income for the duration of the contract. As their properties were informally built they are deemed illegitimate by the government, awarding them no legal protections. Based on this, landlords are also eager to collaborate with Vanke as being a semi-state owned company they can mitigate the illegitimacy of the building stock by providing legal protections. The village-shareholding company which is comprised of the landlords of Xinweizai are also motivated to engage with Vanke for the improvements to the public space. This is because

Vanke are providing the funding for this and it also removes the responsibility of the degraded streets and public spaces from the shareholding company to Vanke.

All of the respondents from the long interviews in Nantou claim the ambition of the Nanshan District Government is to ‘gentrify’ Nantou and to use the UABB as a catalyst for later development. Carrie suggested that the government is using micro-renewal in Nantou because of the law forbidding the demolition of the historical buildings, forcing them to capitalize on the area’s heritage. Their strategy is to use this cultural heritage, the improvements to the visual amenity and public space and the increased awareness of Nantou through the exhibition to attract investors and increase land values. The end goal is a ‘Town of Design’ that will have recognition and branding similar to the Dafen Oil Painting Village. This plan demonstrates that the NDG sees the possibility for the economic development of Nantou through the establishing of cultural industries. The NDG is not motivated by a desire to improve the lives of the existing Nantou residents. Their ambitions lie in laying the foundations to attract economic capital to Nantou. The developer hired for this project is also owned by the NDG suggesting their views are aligned.

The Shenzhen Centre for Design project was designed as an experiment to highlight alternative ways of improving urban villages, by providing new facilities for their inhabitants and engaging with them in a public participation process. Their project emerged as a reaction to the criticism of demolition-reconstruction. It was also intended to demonstrate that positive interventions can be made by focusing on the small scale. The SCD contends that there is too much emphasis in China on large public space schemes and the details of smaller streets and squares are often overlooked. Despite the failure of their modular units, the SCD has taken lessons from this project. It was the first time they had incorporated community participation into a project and they hope to expand participation and engage with more residents both inside and outside of urban villages in the future. It is clear that this project was not linked to a business strategy.

The NLR is motivated by a need to create new spaces for socialising, discussion and entertainment for the residents. They perceive themselves as a group of young people giving back to the community. As they all worked for the UABB they became familiar with the problems in Nantou and wished to continue providing their expertise to the residents. They are funded by the Nanshan District Government which has a centre that supports

44 nongovernmental groups looking to make improvements in urban villages across the district. The NLR is not directly related to the government in the same way as the SCD but they are reliant on the government as a funding source. The projects of NLR have been well- received by the residents illustrating that they are having a positive effect in Nantou.

4.3 The changing viewpoint of the government

Houses are to be built to be inhabited, not for speculation.

In December 2016 President Xi Jinping issued the above statement at the Central Economic Work Conference signalling a changing approach to the property market (Yeqiang, 2017). This is the one of two changes made by the government that have encouraged the growth of micro-renewal projects. The first change is the intention of the central government to increase the size of the rental sector in cities. The second change is the shift in compensation policy from financial compensation to compensation in the form of new property. As well these two direct changes in policy, respondents also proposed that the government is beginning to recognise the importance of preserving Shenzhen’s history.

According to Huang Weiwen the house prices for new properties built in the demolition- model of urban renewal have become increasingly unaffordable to prospective buyers. Much of the development has been speculative and due to the high prices some of these properties have been purchased by investors to hold as assets and left unoccupied. In general, property prices in Shenzhen are considered to be amongst the highest in mainland China (Zheng, 2017). In order to combat the high property prices and quell this form of speculative development the government has issued a series of measures. These have included the introduction of price controls and the tightening of restrictions on buying eligibility (Yangpeng, 2018). At the same time, the government is encouraging the growth of the rental housing sector as an attractive and secure form of tenure. The government is making public land available to real-estate developers for the sole purpose of building rental housing.

The property prices and government measures have created a new market for rental housing. The renovation of apartments in urban villages is one area where developers can provide this housing to satisfy middle income groups. In the case of Vanke, they are purposely leasing and renovating underutilised sites such as old warehouses, factories,

45 former office complexes and urban villages. The returns on doing this are higher than purchasing land and constructing new developments (Jim, 2018; Hong Kao interview).

In many of the past demolition-reconstruction projects in urban villages, the landlords welcomed the proposals as they were awarded financial compensation. Wanting noted that during the renewal of Gangxia West a phrase was promoted that suggested renewal ‘creates billionaires overnight’ due to the high compensation sums. This narrative meant that village landlords across Shenzhen welcomed the prospects of urban renewal as they envisaged themselves becoming rich. In some cases, villagers built additional rooms on top of their properties to increase the floor area that would be lost to urban renewal and therefore increase their compensation. However, Huang Weiwen argues that this idea is no longer ‘realistic’ as the government has changed this policy. Villagers are now compensated under the 1:1.1 rule –– for every one square metres owned by the villager they are compensated by 1.1 square metres of floor area in a new building. This system no longer compensates villagers with immediate income. Villagers now must wait until the new building is completed before they can rent out their increased floor area. Villagers must also relinquish their permanent right of ownership to their property. Instead, they allocated ownership rights for a period of seventy years in their new property. There is also an additional cost of hiring a property management company to oversee the properties. Huang Weiwen suggests this is because the new properties are targeted towards higher income groups who expect a higher standard of service provision.

The changes in the compensation policy suggest that, for the village landlords there is less of an appetite for the demolition-reconstruction of urban villages. However, in the interviews with the landlords and the village shareholding company in Gangxia they all still hoped that Gangxia would be demolished in the future. Their reasoning was that the fire safety was too poor and building density was too high. As such, it could only be addressed through demolition. According to the Gangxia village shareholding company, the villagers who have engaged in projects with developers like GR and Vanke may still be interested in demolition-reconstruction. However, they are aware that these projects can take 10 years to come to fruition so in the interim they perceive renovation as a reliable method of increasing their income.

Six of the long interview respondents suggested that the government has changed its viewpoint towards Shenzhen’s history. In the past, Wanting argues that the phrase

‘Shenzhen has no history’ was circulated by the government to suggest there is nothing of historical value in the city. It served to promote a successful image of the SEZ –– that the policies of the government had built a booming metropolis from a cluster of insignificant fishing villages. This narrative was used to legitimise the destruction of urban villages as there was nothing of historical importance perceived to exist there. Now, the government has found a new economic development opportunity in protecting historical sites of urban villages. It is connected to the idea of using culture as a policy instrument to attract investors and regenerate neighbourhoods.

4.4 The effects of micro-renewal

Based on Roberts (2016) definition of urban renewal discussed in the theoretical framework the effects of micro-renewal are divided into four categories: physical, economic, social and environmental. The physical effects have been further subdivided into the physical changes to buildings and the physical changes made to public space. The effects are presented in table 4.1.

Table 4.1 The physical, economic, social and environmental effects of micro-renewal. TYPES OF MICRO-RENEWAL

EFFECTS Landlord-developer Developer initiated in Government initiated in Not-for-profit initiated initiated in Gangxia Xinweizai Nantou in Nantou  Renovated apartment  Currently two  Construction of new  Renovation of a building Loft 1980 renovated apartment buildings (B3 & B4) former Mah-jong place  Improved fire safety buildings which are  Renovated factory into an apartment and  Increased number of now attached together buildings and office space that is windows (increased and branded as Port dormitories as rented on Airbnb sunlight) Apartment exhibition space for  Renovation of  Creation of common  Increased number of UABB shopfronts Physical (buildings) rooms rooms (all single  Creation of concert  Rooftop terrace studios) venue  Installation of  Installation of  Renovation of rainwater harvesting elevators apartment building device  Improved fire safety into hotel Villa  Renovation & preservation of the South & East Gates

 No change  Re-paved pavements  Removal of market-  Installation of street  Re-paved public place in Baode Plaza furniture (benches and square with the  Re-paved streets locations to hang installation of new  Re-design and re- clothes) Physical (public space) street furniture and paving of Baode Plaza  Renovation of garden trees  Installation of street space into a film art & sculptures screening venue (under construction)

 Rental increase in Loft  No change to rental  Slight increase in rent 1980: From 1600 price across Nantou yuan to 3200 yuan per  Loss of business at low (between 100 and 200 month cost convenience yuan) stores due to a decline  New commercial in the customer base developments: 2 new bookshops, a café, a co-working space, and Economic a new hotel Villa  Increased business at stores from visitors to the UABB  Loss of 12 businesses with the removal of the Baode Plaza marketplace

 Displacement of the  Displacement of  Displacement of  Establishment of Old previous tenants previous tenants. previous factory Town Forum for (primarily low income Tenants can only workers to Longgang residents to discuss cleaners) return if they are District for the UABB issues in Nantou  Promotion of art in single and aged  Displacement of 12 Gangxia between 18 and 35. At market traders from  Education of children the time of research, Baode Plaza Social about environmental none of the previous  Displacement of 20 sustainability with the tenants were residing businesses across all rainwater harvesting there. of Nantou device  New entertainment space with the new concert venue

 Installation of  Improved building  New waste disposal  New waste disposal rainwater harvesting energy efficiency facilities facilities in SCD’s Environmental device modular units. Only  Improved building one remains. energy efficiency

4.5 The winners and losers of micro-renewal (a) Developer-landlord initiated

The primary beneficiaries of Loft 1980 are Glocal Republic, the landlord, the new middle income residents and the locals who have participated in some of the art and educational events. It has been a successful project for Glocal Republic as the building is fully occupied, generating a profit and has elevated their profile in Gangxia (they have been approached by other landlords interested developing similar projects). The landlord has benefitted from the renovation of their building without incurring a financial cost, has gained an increase in their income and no longer has the responsibility of management and upkeep of the buildings. The tenants of Loft 1980 designers, IT workers, financiers and freelancers have secured housing of high quality that is centrally located in Shenzhen.

The group that are disadvantaged the most by this project are the previous tenants. The previous tenants were low income workers (mainly cleaners) and were sharing rooms. The rent per room was 1500 yuan. The rent of Loft 1980 is double from the rental price prior to the renovation and is substantially higher relative to other apartments in Gangxia. A landlord who owns 20 apartments in Gangxia said his rent varies between 900 yuan for a 11m2 room to 1300 yuan for a 66m2 apartment. The quality of Loft 1980 is superior to much of other housing stock in Gangxia but it is not priced at levels affordable to the lowest income groups. It is unclear whether the displaced tenants secured alternative housing in Gangxia or elsewhere in Shenzhen, and what effect this may have had on their access to employment and social networks.

(b) Developer initiated

The actors who gain the most from this micro-renewal project are Vanke, the government, the landlords, and the tenants of Port Apartment. Vanke, while not making an immediate profit, will gain in the future. Through the renovation of the building stock, they are creating a new market for their services. Should all of Vanke’s ambitions come to fruition, their financial returns will be considerable. It can also be argued that the government as a partial owner of Vanke also benefits from this project. The infiltration of Vanke into Xinweizai and other urban villages at the scale they are aiming for removes the fire safety and security concerns and awards legal protections to the buildings. It also improves the image of urban villages through upgrading the building stock and beautifying the public spaces, in turn improving the image of Shenzhen for potential investors.

The landlords of this project, like in Gangxia are gaining from a guaranteed 10% increase in income every three years. They also benefit from Vanke taking over the management and running of their housing stock.

All of the Port Apartment residents interviewed for this research cited the low rental price for a self-contained studio and the proximity to employment as key factors for choosing to rent here. Vanke estimates that currently over 50% of the residents work for the technology company Huawei, a five minute walk away. One resident interviewed who worked for Huawei preferred Port Apartment to Huawei’s dormitories as Port Apartment is closer to the office and is 10,000 yuan cheaper per year, which equates to a saving of 800 yuan per month. It is clear that all of the residents and particularly those of Huawei are winners of this micro-renewal project based on its affordable price and location.

The previous tenants of the Port Apartment buildings can be labelled as the main losers of this micro-renewal project. According to Vanke, the residents have relocated to neighbouring villages and are welcome to return to rent their apartments in the future. However, unless they fit the requirements (single and aged 18 to 35) they will remain displaced by this project. This displacement has also indirectly affected a neighbouring convenience store selling low cost food items. Their customer base has declined as a result of the displacement of the former tenants leading to a loss in income. This correlation was corroborated by the residents of Port Apartment –– only one of the interviewed residents regularly shops within Xinweizai. Most of the residents opted to eat at their place of work and described the environment of Xinweizai to be of poor quality with few shops that cater to them.

As Vanke’s renewal plans progresses, more residents will be displaced. This will occur directly when Vanke takes over the management of a building and evicts the tenants to begin renovation. It can also happen indirectly as noted by a local resident of Xinweizai. He said that he was fearful that his rent would increase as the image of Xinweizai improves through the renovations which may allow his landlord to charge a higher rent. More displacement may also lead to the closure of the convenience store if the new residents choose not to frequent it. Other businesses in Xinweizai may face the same fate if the new residents have the same tastes as the ones interviewed at the Port Apartment and choose to eat and purchase goods elsewhere. The residents of the Port Apartment and neighbouring store is not a representative sample but does indicate the general direction of the economic and social effects of this project.

At the time of this research, the Nanshan District Government and the developer have been successful in their aim of attracting investors through the UABB. For this reason they can be described as a beneficiary of micro-renewal. Nonetheless, it remains to be seen how successful their long term proposals will be when they are put in place. Other actors that can be described as beneficiaries of micro-renewal in Nantou are the remaining business owners, residents and the village shareholding company. All of the businesses interviewed in Nantou had noted an increase in customers during and after the exhibition. The exhibition ended on March 17th, 2018 and this data was collected in March/April 2018 so it is unclear if this increase in business will be permanent. It is possible it was just an outcome from the increase in visitors for the UABB. The residents have also benefitted through the improved visual amenity and repaved streets. The landlords of the village shareholding company have benefitted as they have been able to increase their rents as a result of the improvements to Nantou.

At the same time, the government initiated micro-renewal has impoverished a number of groups. While the residents have gained visual amenity they have also been economically disadvantaged. The rent on apartments has increased since the work began in Nantou for the staging of the exhibition. Vonnie estimated that the average monthly rent increased between 100 and 200 yuan, although she also noted that the rent had been steadily rising in Nantou prior to the exhibition albeit at a slower rate. The rent on commercial businesses has also increased. This was the case for one of the local businesses nearby Baode Plaza.

The most impoverished groups are those that were displaced via government action. The workers of the former factory buildings were displaced to the Longgang District. Ten market traders were also displaced without compensation for the renovation of Baode Plaza. It was not yet known at the time of research if an alternative trading space will be allocated to them in Nantou. Both traders interviewed were faced with the possibility of closing down. One trader has temporarily re-opened in a small side street in Nantou but has had a decline in sales. If an alternative site is not found they will have to close down as they can no longer afford the rent on their storage premises. The other trader interviewd had reopened in a section of a store that belonged to a relative. However, it was only a temporary solution until a new trading site was designated. They face closure if none is found.

Further displacements were made due to the eviction of 20 stores across the entirety of Nantou by the Nanshan District Government. It is unknown by this research what happened to the store owners after eviction. In terms of the new stores introduced, few of them cater towards the needs of the existing low income residents. A new bookshop was described by Fish as ‘completely useless’ as it is expensive and primarily sells books from highly specialised disciplines that do not fit the interests of Nantou’s residents. At the Villa Hotel none of the hotel staff lived in Nantou prior to its opening.

The exhibition and new businesses have provided few employment opportunities for existing residents and cater little towards their needs. If the government is successful in executing the vision of the ‘Town of Design’ and attracting investors, it will further increase rents. This in turn may lead to more displacement of residents and businesses if rental increases exceed their financial capabilities. (d) Not-for-profit initiated

Residents have strongly benefitted from the not-for-profit initiated projects of NLR. Through the NLR, business owners have gained new shop fronts to help entice customers and the residents have a new platform to express their views through the Old Town Forum. The planned community garden and outdoor film venue will also offer a new freely accessible public space for entertainment and socialising. As well as the NLR projects, the remaining SCD unit is beneficial as it has provided a shading seating space in a location where no seating was provided previously. However, a negative impact of the not-for-profit initiated projects is in the three SCD units that were removed. These units negatively impacted the visual amenity for residents due to the poor quality of materials used as they became dirty and damaged shortly after installation and posed a danger to children. The bins also created pungent smells that were a nuisance for the locals that resided beside the units. As the SCD project was an experiment it can also be argued that it has been beneficial to them. They intend to use the knowledge gained from their failure in Nantou to help them better implement future projects.

CHAPTER 5: DISCUSSION

This chapter situates the results of this research within the context of the theoretical framework. It firstly deems micro-renewal as a predominately physical response to perceived problems and opportunities in urban villages. Secondly, the roles of the actors laid out under the demolition-reconstruction model of urban renewal are re-assessed in light of the results. Subsequently, micro-renewal is argued to lead to result in gentrification in the same manner as demolition-reconstruction. This chapter concludes by re-evaluating the conceptual scheme.

5.1 The intervention of micro-renewal

The three cases exemplify that micro-renewal is a largely physical intervention in Shenzhen’s urban villages. The actions of the different stakeholders fit Hall’s (2006) assertion that urban renewal is based on both real and perceived problems. Under the landlord-developer and developer initiated types of micro-renewal, urban village problems are physical and the response is physical –– the building stock is unfit for purpose so it must be refurbished to a higher quality. Under the government initiated scheme, the historical fabric of Nantou and the UABB is perceived as an opportunity to generate long-term economic growth in the area. The government is responding physically through restoring the historic gates and temples, the beautification of public spaces and the clearing out of existing businesses for new investors. Not-for-profit initiated projects are the only form of micro-renewal where solutions take a social form in addition to a physical response. The perceived core problem is that Nantou is deficient in community spaces for entertainment, socialising, debate and discussion. This problem is remedied physically through the construction of new spaces for entertainment but also socially through the development of the Old Town Forum.

5.2 Redefining the roles of the stakeholders

The government, developers and village landlords are the three most influential decision- makers in micro-renewal. However, their roles do not fit their positions suggested by Yi et al. (2017) and Zhou, et al. (2017) in the demolition-reconstruction model. The government still appoints a developer but the intention of the government changes, they do not facilitate the construction of a new neighbourhood on the site of a former urban village. Instead, they are promoting the protection of cultural heritage as a tool to attract investment. In projects that the government is not directly involved in such as in Gangxia and Xinweizai, they have

55 crafted an environment that is promoting rental housing and reducing the rewards of financial compensation under demolition-reconstruction.

Under the micro-renewal framework, the developer no longer just constructs new housing stock to be sold on the private property market. Developers instead deliver renovated housing stock for the private rental market. In this sense, the developer takes on the additional role of a rental housing service provider. Furthermore, in Vanke’s case they now solely perceive themselves as a service provider and not a developer.

Landlords negotiated for the best financial compensation using their land as a bargaining chip in the demolition-reconstruction process. In micro-renewal, landlords maintain their ownership rights and lease their property to companies that act as both developers and rental housing providers. In the landlord-developer initiated micro renewal landlords have refashioned themselves into developers and rental housing providers.

The NLR as a not-for-profit stakeholder fits Q. Liu’s (2017) conception of ‘third sector communities.’ These communities are defined as being outside the typical government, developer and landlord framework in relation to urban renewal. The NLR is a member as they do not fit these categories and are advocating for the protection of urban villages. The extent to which the SCD can be positioned in this category is dubious as it is a government company but its aims in Nantou were not in line with the NDG.

The residents in micro-renewal have little agency in the decision-making process, mirroring their situation in demolition-reconstruction projects (see Wu, 2016). In both landlord- developer and developer initiated projects, they are displaced. Under the government initiated project, it is primarily businesses and market traders that have been evicted. Not- for-profit initiated micro-renewal is the only space where residents have been incorporated into the decision-making process through a public participation scheme, although this has had a varying degree of success as noted by the failure of the SCD project.

5.3 Gentrification through micro-renewal

The effects of micro-renewal can be examined through the lens of gentrification. The economic and social effects of the landlord-developer, developer and government initiated forms of micro-renewal mirror the effects of demolition-reconstruction. The most notable effect is that tenants continue to be rendered as invisible and are directly displaced. This matches Y. Liu’s (2017) conclusion that urban redevelopment in urban villages leads to

56 residential displacement. In the government-initiated project it is an overt urban strategy to promote economic growth through the attraction of private capital which has triggered an increase in average rents. Existing businesses were displaced as they do not fit the consumption patterns of middle income and higher income groups that the government want to attract to Nantou. This typifies Hao et al. (2012) contestation that urban villages become more mono-functional after redevelopment. Nantou has lost its industrial function with the displacement of the factory and the low cost stores are being removed. This is also the case in Xinweizai, where low cost stores run the risk of displacement with the loss of their customer base. In the landlord-developer initiated project GR has captured the rent gap between the past and current values.

The not-for-profit projects cannot be framed in a gentrification discourse at the time of research. Neither project directly or indirectly displaced tenants or increased rents. It has also cast the residents as an interest group in Nantou through Old Town Forum in an attempt to reduce their invisibility.

5.4 Re-evaluating the conceptual scheme

Based on the results and analysis of this research the conceptual scheme developed at the outset of this research can now be better presented in figure 5.1. The new concept of micro- renewal motivations has been added to indicate what is pushing stakeholders towards micro-renewal. This suggests the promotion of rental housing by the government, changes in compensation policy in demolition-reconstruction, new business opportunities and opportunities for public participation projects are motivating factors for stakeholders to implement micro-renewal projects. Micro-renewal is subdivided into the four types identified by the research: landlord-developer initiated, developer initiated, government initiated and not-for-profit. The projects of each type are then listed alongside the stakeholders involved in each case.

Urban renewal pressures 1. Land shortage 2. Building Quality 3. Rent Gap Micro-renewal motivations

 Promotion of rental housing  Change in compensation Large-scale policy demolition & reconstruction  Business opportunities Micro-renewal  Public participation Large-scale demolition and

experiments reconstruction

Landlord- Developer Government Not-for profit developer initiated initiated initiated initiated

Residential Residential Historic Public space renovation renovation preservation enhancement

Public space Public space Commercial enhancement enhancement renovation

Commercial renovation

Developer & Developer, landlord, Government, Not-for-profit

landlord village-shareholding Developer, village- agencies, residents, company shareholding village company, business shareholding owners company

Physical effects Economic effects Social effects Environmental effects

Figure 5.1 Revised conceptual scheme

CHAPTER 6: CONCLUSION

This chapter provides an answer to the research question that guided this research by outlining the aims and effects of micro-renewal. Based on this, a number of policy recommendations are suggested to guide the future implementation of micro-renewal policies. Suggestions are then made for further academic inquiry on the topic of micro- renewal in Shenzhen. This chapter culminates with a reflection on the limitations and challenges of this research.

6.1 The aims and effects of micro-renewal The intent of this thesis was to answer the question: What are the aims and effects of micro- scale renewal projects in the urban villages of Shenzhen? To do this, three urban villages were selected as case studies and data was collected on their respective micro-renewal projects through the use of interviews, soliciting the views of stakeholders, experts and residents in each case. To further validate the data, an analysis of documents was enacted. The results of this research proposed that there are four types of micro-renewal: landlord- developer initiated, developer initiated, government initiated and not-for-profit initiated. Based on this framework, it is now clear that the aims and effects of micro-renewal are dictated by the stakeholders governing the project. This is due to their differing scales of resources and their respective motivations.

The aim of landlord-developer initiated projects is to upgrade the housing stock to attract higher income tenants that can afford higher rents. As a result, the developer and landlord can both extract increased revenues from renovation. The main effects of this are the improvement in housing quality, increase in rents and the displacement of the previous tenants.

The aim of developer initiated projects is for the developer to create a market for the provision of their own services including rental housing, security, cleaning, business operations and kindergarten facilities. In doing so, the developer removes the problems of the unsatisfactory quality and illegality of the housing stock and produces an environment conducive to extracting long-term profits. The main effect of this is the displacement of the previous tenants if they do not fit the requirements to rent a renovated housing unit and the displacement of businesses as new tenants appear to have different tastes and shopping habits.

The aim of government-initiated projects is to develop cultural industries and attract private investment into urban villages with the goal of increasing land values. The main effect of this is the improvement of the visual amenity, increase in rents and the displacement of existing businesses for the establishment of new higher quality businesses.

The aim of not-for-profit initiated projects is to focus on the smaller scale possibilities for urban renewal by providing new spaces for socialising and entertainment, improvement of the visual amenity and to promote public participation. The first effect of this is the provision of new publicly accessible spaces and the beautification of shopfronts. The second effect is the engendering of a bottom-up approach to urban renewal by transitioning the residents into an active interest group.

Overall, the landlord-developer, developer and government initiated projects all share the same aims and effects. Their aim is to generate economic development in urban villages with the end result being gentrification as new businesses and tenants move in. These stakeholders all have the resources to improve the housing stock and public spaces and remove the fire safety concerns from urban villages. Residents have no agency in this process and are displaced. For the not-for-profit initiated projects, the focus is on the present and addressing the needs of the existing residents. These groups are limited to small-scale public space improvements and renovations due to a lack of resources. They do not have the capacity to address the physical problems of housing in urban villages.

This research has contributed to the academic knowledge of micro-renewal by revealing its aims and both its positive and negative outcomes. It serves to remind academics, policymakers and practitioners that despite the widespread criticisms of demolition- reconstruction it does not mean that we should automatically promote micro-renewal as a less problematic alternative.

6.2 Recommendations for future policy

The results of this research indicate that the perspective of the existing migrant residents and business owners is overlooked in micro-renewal projects. Only in the case of the projects led by the not-for-profit sector are the residents awarded some agency and positioned as a stakeholder. Policymakers should encourage more collaboration with the residents by recognising them as stakeholders and including them in a public participation process. This would help to minimise the further marginalisation of this group. In the cases of apartment renovation the tenants should be given the opportunity to return to their

60 newly renovated property or be given access to alternative housing in the same village without incurring an increase in rental costs. Efforts should be made to provide business owners and market-traders with alternative spaces within urban villages so they can continue the provision of the low cost products required for many of the low income residents.

This raises an important question if the government wishes to maintain urban villages as a source of low income housing. If low income housing will no longer be available in a redeveloped urban village, than policymakers need to explore avenues for compensation to minimise the effects of displacement to the residents. This could be in the form of giving them access to social housing in the city.

6.3 Recommendations for further research

While this research has attempted to bridge the gulf of knowledge on micro-renewal projects it has also illuminated other avenues where further knowledge is required. This research suggests three key areas for future academic inquiry.

(a) The role of the government

A limitation of this study is the absence of primary data collected directly from the government. Future research should explore both Shenzhen’s city and district governments perspective on micro-renewal and address how they intend to use this tool in other urban villages. Related to this, there is a lack of transparency on the relationship between the government and developers. It was evident that Vanke were acting on behalf of the government in some capacity but to what extent is unclear.

(b) Longer term effects of micro-renewal

In Xinweizai and Nantou the micro-renewal projects are in the early phases of development. A follow-up longitudinal study should be implemented when these projects have progressed further or reached completion. A purpose of such research would be to illuminate how these urban villages have changed over time and to investigate the longer- term effects of micro-renewal. It could also provide an insight into the extent to which the core stakeholders (Vanke and the Nanshan District Government respectively) have achieved their aims.

In Nantou, the SCD and NLR had experimented with the participation of the residents in micro-renewal. While it was a failure for the SCD, they wish to increase participation in future projects. For the NLR, community participation is ongoing through the platform of the ‘Old Town Forum’. There is a need to review how community participation is implemented in these cases and to what extent the views of the community are taken into account and incorporated into renewal plans. Insights into this could offer suggestions for how participation could be adopted into projects lead by developers and the government and to position residents as an active stakeholder.

6.4 Reflection

The short time frame of fieldwork and the limited access to respondents were significant challenges in this research. The most notable result of this is the absence of interviews from government actors. This was further exacerbated by the language barrier meaning policy documentation was inaccessible. The perspective of the government was inferred from other respondents and through the analysis of news articles. The landlords of Port Apartment and Loft 1980 were also not available to interview during this research. Their viewpoints were inferred from the interviews with the developers. A longer fieldwork period may have provided an entry point to these actors. As a result, the perspective and actions of the government and the landlords cannot be generalised to other cases.

As urban renewal can be a sensitive topic, there may have been times when interviewees were not fully upfront about the impacts of the micro-renewal projects. To overcome this, I interviewed neighbouring residents and business owners. However, it was not possible to access the displaced residents or business owners in any of the cases to get a clear indication of their current situation and their perspective on these projects. The two displaced traders in Nantou were only accessible as they had previously been interviewed by Fish. Without this data, it is difficult to clarify the full effects of micro-renewal.

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APPENDICES

Appendix 1. Interview guides

1. Interview guide for developers.

 Can you explain this project to me?  Why did you choose this urban village?  What kind of people live in this building/what is their profession?  What kind of people live in the neighbouring buildings/what are their professions?  Who were the previous tenants?  What is the rental price for a room?  Is the rental price different from before it was renovated?  What was the building like before you renovated it?  How does the project benefit the owner (landlord) of this building/How do you convince them to take part?  Why is your company renovating buildings in urban villages?  Why is this urban village not being demolished?  Who are your competitors in the market?

2. Interview guide for not-for-profit agencies/experts.

 Can you explain this project to me?  Where did the funding come from?  Why did you choose Nantou for this project?  Has the project been successful?  What are your future plans?  What are the government plans for Nantou?  Has the average rents changed in Nantou as a result of the UABB exhibition?

3. Interview guide for existing residents/business owners/landlords not involved in an urban renewal project.

 Has the renewal plan affected you in anyway?  Have you noticed a change in rents?  Have people been evicted/displaced as a result of this project?  What do you think are the  [Nantou]: Have you visited the UABB exhibition? What is your opinion of it?  [Nantou – shown image of SCD unit]: Do you use this structure? What is your opinion of it?

Appendix 5. Interview guide for residents of renovated buildings (Port Apartment).

 What is your profession?

 Why did you choose to live here?  How long do you plan on staying here?  Would you recommend Port Apartment to your friends or colleagues?  Do you use the shops, restaurants or other services in Xinweizai?  Do you see any problems in Xinweizai?

Appendix 2. List of documents analysed.

Bo, X. (2017) ‘Economic watch: China eyes rental housing as solution for rising property prices.’ Xinhua net. Available online at: http://www.xinhuanet.com/english/2017-08/30/c_136568357.htm (Accessed 4th May, 2018)

China to further squeeze asset bubble in 2017. (2017) Available online at: http://www.scio.gov.cn/32618/Document/1542242/1542242.htm (Accessed 4th May, 2018)

China is trying new ways of skimming housing-market froth. (2018) The Economist. Available online at: https://www.economist.com/china/2018/02/15/china-is-trying-new-ways-of- skimming-housing-market-froth (Accessed 12th April, 2018)

Dong, E and Panckhurst, P. (2018) ‘Xi seeks to tame China’s wild property market with rental push’ Bloomberg. Available online at: https://www.bloomberg.com/news/articles/2018-01-24/xi-seeks-to-tame-china-s- wild-property-market-with-rental-push (Accessed 4th May, 2018)

Glocal Republic (2017) Company Vision. Shenzhen: Glocal Republic.

Yan, M. (2017) “Curating in Nantou: A case study of village/city co-existence and regeneration” in Yan, M, Xiaodu, L and Ye, Z (eds.). Cities Grow in Difference. Shenzhen: UABB 2017

Yeung, K. (2018) ‘Chinese property market steady in January but home prices dip in big cities’ South China Morning Post. Available online at: https://www.scmp.com/property/hong-kong-china/article/2134573/chinese- property-market-steady-january-home-prices-dip-big (Accessed 12th April, 2018)

Yeqiang, W. (2017) ‘Strict realty rules can curb speculation’ China Daily. Available online at: http://www.chinadaily.com.cn/opinion/2017-01/13/content_27942001.htm (Accessed 12th May, 2018)