Dwelling in : Development of Living Environment from 1979 to 2018

Xiaoqing Kong Master of Architecture Design

A thesis submitted for the degree of Doctor of Philosophy at

The of Queensland in 2020

School of Historical and Philosophical Inquiry

Abstract

Shenzhen, one of the fastest growing cities in the world, is the benchmark of ’s new generation of cities. As the pioneer of the economic reform, Shenzhen has developed from a small border town to an international metropolis. Shenzhen government solved the housing demand of the huge population, thereby transforming Shenzhen from an immigrant city to a settled city.

By studying Shenzhen’s housing development in the past 40 years, this thesis argues that housing development is a process of competition and cooperation among three groups, namely, the government, the developer, and the buyers, constantly competing for their respective interests and goals. This competing and cooperating process is dynamic and needs constant adjustment and balancing of the interests of the three groups.

Moreover, this thesis examines the means and results of the three groups in the tripartite competition and cooperation, and delineates that the government is the dominant player responsible for preserving the competitive balance of this tripartite game, a role vital for housing development and urban growth in China. In the new round of competition between cities for talent and capital, only when the government correctly and effectively uses its power to make the three groups interacting benignly and achieving a certain degree of benefit respectively can the dynamic balance be maintained, thereby furthering development of Chinese cities.

Declaration by author

This thesis is composed of my original work, and contains no material previously published or written by another person except where due reference has been made in the text. I have clearly stated the contribution by others to jointly-authored works that I have included in my thesis.

I have clearly stated the contribution of others to my thesis as a whole, including statistical assistance, survey design, data analysis, significant technical procedures, professional editorial advice, financial support and any other original research work used or reported in my thesis. The content of my thesis is the result of work I have carried out since the commencement of my higher degree by research candidature and does not include a substantial part of work that has been submitted to qualify for the award of any other degree or diploma in any university or other tertiary institution.

I have clearly stated which parts of my thesis, if any, have been submitted to qualify for another award.

I acknowledge that an electronic copy of my thesis must be lodged with the University

Library and, subject to the policy and procedures of The University of Queensland, the thesis be made available for research and study in accordance with the Copyright Act

1968 unless a period of embargo has been approved by the Dean of the Graduate

School.

I acknowledge that copyright of all material contained in my thesis resides with the copyright holder(s) of that material. Where appropriate I have obtained copyright permission from the copyright holder to reproduce material in this thesis and have sought permission from co-authors for any jointly authored works included in the thesis.

Publications included in this thesis

No publications included.

Submitted manuscripts included in this thesis

No manuscripts submitted for publication.

Other publications during candidature

Kong Xiaoqing, “Formation of China Merchants Port’s ‘ Model’,” National Maritime Research, no.19 (2017): 38-54.

Kong Xiaoqing, “Book Review: Creating a Paradise for Consumption, Department Stores and Modern Urban Culture in by Lien, Ling-ling,” Journal of history and Anthropology, vol.16, no.2 (2018): 165-168.

Contributions by others to the thesis

No contributions by others.

Statement of parts of the thesis submitted to qualify for the award of another degree

No works submitted towards another degree have been included in this thesis.

Research involving human or animal subjects

This thesis includes interviews and questionnaires. The Human Research Ethics Approval was granted by University of Queensland Humanities and Social Sciences, Low & Negligible Risk Ethics Sub-Committee on 31 January 2018. The approval number is 2018000087.

Acknowledgements

First of all, I would like to thank my principal advisor, Professor Chi-Kong Lai, for his erudition and wisdom, for his model of being a decent and objective scholar, for his kindness and patience in guiding me, a layman of historical research, in the study of history and everyday life.

I also would like to thank Professor Andrew Bonnell, as my associate advisor, for his support and encouragement. He is always ready to offer direct and valuable advice which enriches and perfects my thesis.

Besides, I would express my gratefulness to Ms Dipin, Xiao Li and Zheng Bing for their kind help and support when I studied in the Australian National Library. Gratefulness also to Mr. Xiao Bin and all other staffs of The China Merchants Archives, for their patience and kindness.

Moreover, I would like to thank my friends in UQ, Yang Yanzhe, Kent Wan, Zhang Mu, Wong Wingfai, and Wang Chenchen, for their help and suggestion during my PhD candidature.

I would also offer my gratefulness to those friends and relatives for their recommendation of interviewees, and to all the anonymous respondents for sharing their stories. I could never finish my thesis without your kind help.

Special thanks to two of my best friends, Debbie He and Queenie Chen. Our daily “tripartite meetings” across the Pacific Ocean always make me relax and offer me inspiration and confidence.

Finally, What I need to thank most is my families, who always support and encourage my pursuit and dream, always give me warmth and comfort, always make me strong and fearless.

Financial support This research was supported by Asia Study Grant by The Australian National Library Research Higher Degree Study Grant by the School of Historical and Philosophical Inquiry

Keywords Shenzhen, housing development, driving force, government, developer, consumer

Australian and Standard Research Classifications (ANZSRC) ANZSRC code: 210302, Asian History, 100%

Fields of Research (FoR) Classification FoR code: 2103 Historical Studies, 100%

Table of Contents

List of Figures & Tables …………………………………………………………………i List of Abbreviations used in this thesis …………………………………………….v

Chapter 1 Introduction Shenzhen in the Megacity Perspective ……………………………………………….1 Housing Research in Multi-perspectives …………………………………………….12 Sources and Methods ………………………………………………………………….17 Research Framework and Thesis Outline …………………………………………...18

Chapter 2 The Role of Government Introduction ………………………………………………………………………….…..22 Land Supply ………………………………………………………………………….….23 Housing Policies …………………………………………………………………….…..31 Urban Master Planning and Management ……………………………………….…..46 Conclusion ………………………………………………………………………….……63

Chapter 3 The Role of Developers Introduction ………………………………………………………………………….…..64 The Rise, Prosperity and Current Situation of the Real Estate Industry in Shenzhen …………………………………………………………………………….….67 Wang Shi and …………………………………………………………….……..76 Vanke’s Strategy for Government Policies …………………………...... 84 Vanke’s Products, Marketing, and Property Service ………………………….……100 Conclusion ……………………………………………………………………….……..119

Chapter 4 Housing Choice: Evolution of Housing Conditions and Transportation Introduction …………………………………………………………………….……….120 Housing and Community …………………………………………………….………..123 Transportation Development …………………………………………………………153

Chapter 5 Housing Choice: Children’s Education and Age Care Introduction ……………………………………………………………………….…….167 Anxiety of Children’s Education ……………………………………………………...168 Age Care ………………………………………………………………………………..197

Chapter 6 Conclusion: Affordable and livable city ……………………………….211 Bibliography ……………………………………………………………………………..222 Appendix Appendix 01: Questionnaire ………………………………………………………….240 Appendix 02: Summary of interview finding: dormitory ……………………………245 Appendix 03: Summary of interview finding: rental housing ………………………249 Appendix 04: Summary of interview finding: small-profit housing ………………..253 Appendix 05: Summary of interview finding: commercial housing ……………..256 Appendix 06: Letter of The Human Research Ethics Approval …………………261 List of Figures & Tables

Diagram Diagram 1.1: key development areas and Shenzhen layout …………………9 Diagram 1.2: Shenzhen Spatial Direction and Structure in the1980s, 1990s, 2000s, 2010 …………………………………………………………………………………………9 Diagram 1.3: Housing System …………………………………………………………..20

Diagram 2.1: Location of the Luohu Commercial District …………………………….27 Diagram 2.2: double tracks-triple types-multi-prices ………………………………….34

Diagram 3.1: Vanke’s projects in Bantian area, Longgang District, Shenzhen …….91 Diagram 3.2: Vanke 17 Miles in , Shenzhen ………………………….91

Diagram 4.1: space reshaping model …………………………………………………..144

Diagram 6.1: T-shaped strategic development structure in China and the area of --Macao Great Bay ……………………………………………216 Diagram 6.2: the four Great Bay Areas of the world ………………………………….216 Diagram 6.3: Xiong’an New District in the -Tianjin-Hebei Urban Agglomeration …………………………………………………………………………….221

Table Table 2.1: number and area of land transactions of residential land (1987-2017) …..30 Table 2.2: population of Shenzhen (1979-2016) ………………………………………..36

Table 3.1: number of real estate developer (1990-2016) ……………………………...66 Table 3.2: gross domestic product and contribution of the real estate industry in Shenzhen (1979-2016) ……………………………………………………………………71 Table 3.3: summary of residential housing in investment, floor area, the average price………………………………………………………………………………………….73 Table 3.4: Vanke Financial data (1990~2017) ………………………………………….82 Table 3.5: the subdivision of the Golden Series ………………………………………108 Table 3.6: Vanke full lifecycle products …………………….…………………………..108

Table 4.1: questionnaire data for public transportation ………………………………155 Table 4.2: questionnaire data for facilities of public transportation …………………156 Table 4.3: statistic of public transportation of Shenzhen (1979-2017) ……………..156

Table 5.1: number of secondary schools, teachers and students in Shenzhen (1979- 2017) ………………………………………………………………………………………169 Table 5.2: number of primary schools, teachers and students in Shenzhen (1979- 2017) ……………………………………………………………………………………….170 Table 5.3: number of kindergartens, teachers and students in Shenzhen (1979-

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2017) ……………………………………………………………………………………….172 Table 5.4: enrollment scoring method of , Shenzhen (2018) ………..175 Table 5.5: key undergraduate admission rate of Shenzhen 2018 …………………..178 Table 5.6: average housing price of Futian District, Baihua zone and Yuanling Zone ……………………………………………………………………………………….180 Table 5.7: national data of National Census of 2000 and 2010 …………………….198 Table 5.8: Shenzhen data of National Census of 2000 and 2010 ………………….198 Table 5.9: fee standard of Rongyue Binjiangzhong ……………………203 Table 5.10: fee standard of policy beds of Futian Welfare Center …………....…….204 Table 5.11: fee standard of commercial beds of Futian Welfare Center ……………204 Table 5.12: basic statistics on social pension institutions in Shenzhen …………….205 Table 5.13: fee standard of self-care zone of Taikang Yue Garden ………………...209 Table 5.14: fee standard of nursing-care zone of Taikang Yue Garden ……………209

Figure Figure 2.1: area of land transactions of residential (1987-2017) ……………………….31 Figure 2.2: average sales price of commercial housing in Shenzhen (2005-2017) …31 Figure 2.3: investment in fixed assets and investment in real estate development (1990-1997) ………………………………………………………………………………...39

Figure 3.1: GDP and GDP by real estate industry (1979~2016) ……………………..72 Figure 3.2: the ratio of GDP by real estate industry (1979~2016) ……………………73 Figure 3.3: investment in residential housing (1990~2016) …………………………..74 Figure 3.4: floor area of residential buildings under construction (1992~2016) and the newly started (1998~2016) ……………………………………………………………….75 Figure 3.5: floor area of residential buildings sold (1992~2016) ……………………..75 Figure 3.6: the average selling price of residential houses (1998~2016) ……………75 Figure 3.7: Vanke business income (1990~2017) ……………………………………...82

Figure 4.1: general information of interviewees ………………………………………..122 Figure 4.2: general information of respondents ………………………………………..122 Figure 4.3: hierarchy of housing needs …………………………………………………124 Figure 4.4: buying food and cooking in Shenzhen families ………………………….149 Figure 4.5: questionnaire data for commuting mode …………………………………155

Figure 5.1: comparison of average housing price of Futian District, Baihua zone and Yuanling Zone ………………………………………………………………………….....181 Figure 5.2: the result of pension mode survey …………………………………………200

Photo Photo 2.1: poor condition of buildings in urban village of Shenzhen …………………27 Photo 2.2: the first master planning of SSEZ (1980) …………………………………..48 Photo 2.3: master planning of SSEZ (1984) ……………………………………………49 Photo 2.4: Shenzhen Special Economic Zone Master Planning (1986-2000) ………49 Photo 2.5: Urban spatial structure, ‘clusters in belt shape’ of Planning 1986 ……….50

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Photo 2.6: G.M.S.M. Shekou Industrial Zone General Layout (1980) ……………….51 Photo 2.7: Land use plan for Shekou Industrial Park before 1985 ……………………52 Photo 2.8: diagram of Land use plan for Shekou Industrial Park before 1985 ………52 Photo 2.9: survey map of existing land use of Shekou Industrial Park (1985) ………52 Photo 2.10: Shenzhen City Master Planning (1996-2010) …………………………….56 Photo 2.11: Urban structure of Shenzhen City Master Planning (1996-2010) ………57 Photo 2.12: Control Map of Shenzhen Basic Ecological Line (2005) …………………60 Photo 2.13: Comprehensive Planning of Shenzhen City (2010-2020) ……………….61

Photo 3.1: Yuanling residential community, Futian District, Shenzhen ………………71 Photo 3.2: Vanke Wonderland, Longgang District, Shenzhen ………………………..92 Photo 3.3: Vanke the Fifth Garden, Longgang District, Shenzhen …………………...92 Photo 3.4: Model rooms of Vanke the Fifth Garden ……………………………………92 Photo 3.5: Vanke East Coast, Yantian District, Shenzhen …………………………….93 Photo 3.6: Existing layout of urban villages Shenzhen ………………………………..99 Photo 3.7: Scope of the comprehensive renovation of urban villages ………………100 Photo 3.8: Tianjing Garden, , Shenzhen ………………………………103 Photo 3.9: Plan of Vanke Wonderland …………………………………………………104 Photo 3.10: Vanke Wonderland, Longgang District, Shenzhen ……………….…….104 Photo 3.11: Shenzhen Golden Home, Futian District, Shenzhen …………………...116

Photo 4.1: typical floor layout of outside-corridor dormitory ………………………….126 Photo 4.2: Tongxinling community, Futian District, Shenzhen ……………………….126 Photo 4.3: Sihai dormitory, Shekou Industry Park, Shenzhen ……………………….127 Photo 4.4: Shuiwan C zone dormitory, Shekou Industry Park, Shenzhen ………….128 Photo 4.5: Huaguoshan community, Shekou Industry Park, Shenzhen …………….130 Photo 4.6: weak prevention of gates and anti-theft nets ……………………………...130 Photo 4.7: Yijing Garden, Luohu District, Shenzhen ………………………………….132 Photo 4.8: “井”-shaped floor layout and other similar plans ………………………….134 Photo 4.9: duplex house in high-rise apartment ……………………………………….135 Photo 4.10: bay-window ………………………………………………………………….135 Photo 4.11: entering-garden ……………………………………………………………..135 Photo 4.12: images of Shekou Industrial Park …………………………………………139 Photo 4.13: using landscape as highlights of sales promotion ……………………….140 Photo 4.14: reshaping a bed space …………………………………………………….146 Photo 4.15: line map …………………………………………………160 Photo 4.16: overall plan of Shenzhen Rail Transit Network Planning ………………161

Photo 5.1: Baihua Zone and Yuanling Zone in Futian District ………………………177 Photo 5.2: communities around Baitian Department of Shenzhen Experimental Group ………………………………………………………………………………………181 Photo 5.3: advertisement of Sinolink Garden …………………………………………187 Photo 5.4: advertisement of Great Azure Coast ………………………………………189 Photo 5.5: advertisement of Taoyuanju ………………………………………………..192 Photo 5.6: Rongyue-Binjiangzhong, Guangzhou ……………………………………..203

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Photo 5.7: Futian Welfare Center ……………………………………………………….203 Photo 5.8: Taikang Community national layout ………………………………………..208 Photo 5.9: Taikang Yue Garden, Gaungzhou ………………………………………….208

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List of Abbreviations used in this thesis

1. The CCP, The (中国共产党) 2. The NPC, The National People’s Congress (全国人民代表大会) 3. The SEZ, The Special Economic Zone (经济特区) 4. The SSEZ, The Shenzhen Special Economic Zone (深圳经济特区) 5. The SMPC, The Shenzhen Municipal Party Committee (深圳市委) 6. The SMPG, The Shenzhen Municipal People’s Government (深圳市政府) 7. The GBA, The Guangdong-Hong Kong-Macao Great Bay Area (粤港澳大湾区) 8. The SPLRC, Shenzhen Planning and Land & Resources Commission (深圳规划 国土资源委员会) 9. The CAUPD, China Academy of Urban Planning & Design (中国规划设计研究院) 10. The UPBSZ, Urban Planning Board of Shenzhen (深圳市城市规划委员会) 11. The SSEZREC, Shenzhen Special Economic Zone Real Estate Company (深圳 经济特区房地产公司) 12. The SASAC, State-owned Assets Supervision and Administration Commission (国有资产监督管理委员会) 13. The SSEZDC, Shenzhen Special Economic Zone Development Company (深圳 特区发展公司) 14. CCRC, Continuing Care Retirement Community (持续照护退休社区) 15. The SES, Shenzhen Experimental School (深圳实验学校)

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Chapter 1: Introduction

1.1 Shenzhen in the Megacity1 Perspective Cities originated from “meeting places to which people periodically return”.2 Since the industrial revolution, cities have represented the development of economy, concentration of resources, and improvement of life quality, attracting people to look for better opportunities, such as jobs, living condition, education, and medical care. China is one of the countries where the earliest city appeared and once developed the largest and most prosperous city in the world.3 However, when the People’s Republic of China was established in Oct 1949, the urbanization rate was only 10.64%.4 Urban development was restricted and increased by only 7% in the following 30 years. Max Weber suggested that Chinese cities were a product of rational administration, and their prosperity did not primarily depend upon the citizen’s enterprising spirit in economic and political ventures. 5 William Rowe has proved Hankou was an exception.6 The empirical data of China's urbanization after the economic reform also challenged Weber’s views. In the past four decades, the economy in China developed explosively with strong demands on labor resources. Millions of migrant workers flocked to the cities for more opportunities and better living conditions. The urban development thus has entered a fast track. Urbanization rate in China increased from 17.92% to 58.52% between 1978 and 2017.7

The author witnessed China’s rapid urbanization as an ordinary resident in different cities, and as an urban planner who worked on urban planning projects in many cities of China. As a trained urban planner, the author’s understanding and study of the city began with the attention to urban space, which is one of the two mainstreams of urban studies. Urban planners and architects emphasized the interpretation of spatial structure and scale, seeking spatial solutions to respond to the problems that arose in different urban development periods and developed a self-contained theory system in

1 According to the Oxford Dictionary, a megacity is a very large city, typically one with a population of over ten million people. In the standard of urban scale division of China, taking the permanent residents of urban areas as the statistical caliber, cities are divided into five categories. A small city is with a population of below 500,000 people. A medium city is with over 500,000 and below one million people. A large city is with over one million and below five million people. A super-large city is with over five million and below ten million people. A megacity is with over 10 million people. See “State Council Notice on Adjusting the Standard of Urban Size Division [2014] 51” (Issued on November 20, 2014). http://www.gov.cn/zhengce/content/2014-11/20/content_9225.htm (access on 26/9/2019). According to Wikipedia, as of 2017, The largest megacities are the metropolitan areas of Tokyo, Shanghai, and , each having over 30 million inhabitants. Shenzhen was ranked the eleventh. 2 Lewis Mumford, The City in History: Its Origins, Its Transformations and Its Prospects. (Harmondsworth: Penguin Books, 1961), 18. 3 Fu Chonglan, Bai Chenxi, Cao Wenming. The Urban History of China (Beijing: Social Sciences Academic Press, 2009), 1. 4 China Statistical Yearbook2018 from National Bureau of Statistics of the People’s Republic of China, http://www.stats.gov.cn/tjsj/ndsj/2018/indexch.htm (accessed on 7July 2019). 5 Max Weber. Hans H. Gerth trans and ed. The Religion of China: Confucianism and Taoism. (Glencoe, Illinois: The Free Press, 1951), 16. 6 William Rowe. Hankow: Commerce and Society in a Chinese City, 1796-1889. (California: Stanford University Press, 1984). 7 China Statistical Yearbook2018 from National Bureau of Statistics of the People’s Republic of China, http://www.stats.gov.cn/tjsj/ndsj/2018/indexch.htm (accessed on 7July 2019). 1 different planning levels. Ebenezer Howard’s8 concept of the “Garden City” set up the framework of modern town planning, defined the size of the city and population, and regulated the spatial layout to deal with the relation between people and environment,9 which is still meaningful today.

Another mainstream of urban research, which is usually conducted by historians, sociologists, anthropologists, and economists, focuses on factors of political, economic, social, and demographic growth. Sociologists pioneered the study of the city. The Chicago School, the first urban study school, flourished for 20 years from 1915 to 1935. Robert Park put forward the first urban research paradigm “human ecology”, suggesting that urban analysis included three dimensions of biotic, spatial, and cultural.10 Ernest Burgess created the urban space concentric model to explain the organic, dynamic, and developed urban expansion theory.11 The Chicago School had put people and space together, deepening the concept of community. However, they considered space based on human biological, assuming cultural unity, ignoring the most important factor, human differences. The New Urban School,12 rising in the 1960s, criticized the cultural unity assumed by the Chicago School. They emphasized the importance of human beings in the city and started to pay special attention to ordinary people.

With the development of the Internet, and the advent of the global era, urban research has also developed the urban theory of globalization. How did globalization impact on the city? There were predictions that information technology would make space insignificant, so that the city would lose its importance. However, Saskia Sassen suggests that telecommunications and globalization have been changing the relationship between cities and re-shaping the physical form of the activities that take place in urban space.13 She further points out that the role of central cities is more prominent, and a global urban system is built, in which cities are directly connected

8 Ebenezer Howard is regarded as the foundational figure in modern urban planning. In the 1946 edition of Howard’s book Garden Cities of To-morrow, Lewis Mumford wrote the introductory essay “The Garden City Idea and Modern Planning” to praise the fact that “Howard attacked the whole problem of the city’s development, not merely its physical growth but the interrelationship of urban function within the community and the integration of urban and rural patterns, for the vitalizing of urban life on one hand and the intellectual and social improvement of rural life on the other hand.” In 1998, Peter Hall and Colin Ward wrote a book, Social Cities: The Legacy of Ebenezer Howard, to commemorate the 100th anniversary of Howard’s Garden Cities of To-morrow, pointing out that Howard’s concept of Garden City and Sociable City can still provide guidance and a reference for sustainable urban development in the 21th century. 9 Ebennzer Howward, Garden Cities of To-morrow. (Massachusetts: The M.I.T Press, 1965). 10 Robert E. Park, “Human Ecology”, American Journal of Sociology, Vol.42, No.1 (1936), 1-15. 11 Ernest W. Burgess, “The Growth of the City”, Publications of the American Sociological Society, Vol. XVIII (1925), 85-97. 12 A seminar on “the Industrial Cities in 19th Century” was held at the Yale University in 1963. The participants agreed that the current life of urban dwellers was experiencing some explosive changes, which should be investigated and understood urgently. The proceedings, American City in 19th Century: New Urban History Proceedings, was marked as the birth of the New Urban School. The School had a breakthrough in the expansion of the research scope and methods. They applied sociological theory to the historical research and analysis, used measurement analysis methods in data analysis, paid special attention to the social experiences of ordinary residents who were neglected in the previous studies, and examined the relationship between urbanization and social and population structure. 13 Saskia Sassen, “Impact of the New Technologies and Globalization on Cities”, Arie Graafland and Deborash Hauptmann edited, Cities in transition. (Rotterdam: 010 Publisher, 2001) 2 with the world in economic activities.14 Since the 21st century, the rapid emergence of the megacity has confirmed this point. There are fifteen megacities which developed in China in the past two decades. Kleer and Nawrot point out that Chinese megacities have two unique features. The first is that the emergence of such urban giants was a “top-down process”, which means it is “under the strict control of the state leadership and the power wielded by the Communist Party”. The second is “the influx of people to major agglomerations is a controlled process” through the Hukou system.15

Although many scholars had carried out urban research during the period of the Republic of China, after the establishment of PRC, great changes had been taken place in higher education sector and research institutes. In 1952, the adjustment of colleges and departments of higher education was conducted. Shanghai Tongji University established the first urban planning major in China, but for a long time, planning major was attached to the Department of Architectural Design, focusing mainly on the study of space. At the same time, the Department of Sociology was abolished, and it was not reopened until 1980. Therefore, in more than two decades, the urban study conducted by Chinese scholars was relatively weak, and lack of the perspective of social science. The early urban Chinese studies were conducted by western scholars in mid-1960s.

Skinner proposed the concept of "regional analysis",16 which broke with the traditional method of administrative zoning and also challenged the Weberian notion that believed Chinese cities had flourished or declined due to their political and military values to the ruling regime, therefore the rise and fall of cities had no relations with their economic activities and actions of their residents. He applied his theory in the concrete study of Chinese cities in “Urban Development in Imperial China”.17 He also put forward the problems in urban ecology, sojourning and urban associations, and municipal governance, which he thought scholars often ignored.18 These issues still need to be considered in today’s urban studies. After Skinner, many scholars studied Chinese cities from many other aspects of politics, economy, culture and everyday life. Victor F S Sit explores urban history of China in a time frame of almost 6,000 years.19 Gilbert Rozman compares the urbanization of two large scale societies in premodern period, Ch’ing China and Tokugawa . 20 Remaking the Chinese City examines the

14 Saskia Sassen. Globalization and its discontents. (New York: The New Press, 1998). 15 Jerzy Kleer and Katarzyna Anna Nawrot, ed. The rise of megacities: challenges, opportunities and unique characteristics. (World Scientific Europe: https://www-worldscientific- com.ezproxy.library.uq.edu.au/worldscibooks/10.1142/q0125, 2018). 24. 16 In accordance with the economic regions developed along the river system, Skinner divided China into nine regions. Details see George William Skinner. “Marketing and social structure in rural China”, Parts I, II, and III. The Journal of Asian Studies, Vol.24, No.1 (1964): 3–43; Vol.24, No.2 (1965): 195–228; Vol.24, No.3 (1965): 363-399. 17 George William Skinner. “Urban Development in Imperial China”. The City in Late Imperial China. Edited by George William Skinner. (Stanford, CA: Stanford University Press, 1977), 3-31. 18 George William Skinner. “Urban Social Structure in Ch’ing China”. The City in Late Imperial China, 521-553. 19 Victor F S Sit. Chinese City and Urbanism: Evolution and Development. (: World Scientific Publishing Company Pt. Ltd., 2010). 20 Gilbert Rozman. Urban Networks in Ch'ing China and Tokugawa Japan. (Princeton: Princeton University Press, 1973). 3 modernist transformations of China's cities in early decades of the twentieth century.21 The collection of China Urban stresses rural life and socialism have great impact on contemporary culture in Chinese cities. It focuses particularly on issues of gender, market, and spatial practices.22 China’s Urban Life explores the social and cultural elements, such as clothing, food, housing, entertainment, festivals, cultural relics, streets, architecture, etc., of some major cities in the Ming and Qing Dynasties, such as Shanghai, Beijing, Suzhou, Wuchang, Chongqing, etc., and provides a richer and diversified understanding of the Ming and Qing culture.23 Based on the city guidebooks of several major cities in modern China, Beijing, Shanghai, Beidaihe, Qingdao and Tianjin, Finding Urbanity reviews the changes in urban space, images, and culture in modern China.24 John Wilson Lewis compiled a selection of papers covering a wide range of topics of political, economic, social, and legal issues, providing a deeper understanding of cities in the late Imperial and Republican China.25

Some scholars take one city as example to conduct Chinese urban studies. William Rowe carried forward Skinner’s theory, pointing out that Hankou became a commodity distribution center because of commercial development. Hankou promoted the development of its surrounding areas, and its business guild organization not only safeguarded the interests of the industry but also shared the responsibility of local social utilities, becoming a kind of autonomous organization. 26 Wang Di takes teahouse as a starting point to discuss the transformation of urban space and daily life in Chengdu in 100 years of the 20th century.27 David Strand researches ordinary residents in Beijing, such as rickshaw pullers, policemen, trade unionists, workers, and restaurant owners, to explore how they gathered their political experiences to deal with the changes in a turbulent era in the early twentieth-century.28 Madeleine Yue Dong Focuses on the everyday life of residents of Republican Beijing and examine the state and its relation to everyday life, and how “old Beijing” culture was reserved.29 Kristin Stapleton examines the history of urban planning and administration of Chengdu.30 Soren Clausen and Stig Thogersen study urban development history of Harbin under

21 Joseph W. Esherick, ed. Remaking the Chinese City: Modernity and National Identity 1900-1950. (Honolulu: University of Hawaii Press, 2001). 22 Nancy N. Chen, Constance D. Clark, Suzanne Z. Gottschang, Lyn Jeffery, ed. China Urban: Ethnographies of Contemporary Culture. (Dulhan: Duke University Press Books, 2001). 23 Xiaodi Li, ed. China’s Urban Life. (Beijing: Press. 2013). 24 Wu, Renshu, ed. Finding Urbanity: Guidebooks and the Study of Modern Chinese Cities (: Republic of China History and Culture Society, 2019). 25 John Wilson Lewis, edited with an introduction. The City in Communist China. Stanford, CA: Stanford University Press, 1971. 26 William Rowe. Hankow: Commerce and Society in a Chinese City, 1796-1889. (California: Stanford University Press, 1984). 27 Di Wang. The Teahouse: Small Business, Everyday Culture, and Public Politics in Chengdu, 1900- 1950. (Stanford, CA: Stanford University Press, 2008); Di Wang. The Teahouse under Socialism: The Decline and Renewal of Public Life in Chengdu, 1950–2000. (Ithaca: Cornell University Press, 2018). 28 David Strand. Rickshaw Beijing: City People and Politics in 1920s. (Berkley: University of California Press, 1989). 29 Madeleine Yue Dong. Republican Beijing: The City and Its Histories. (Berkley: University of California Press, 1989). 30 Kristin Stapleton. Civilizing Chengdu: Chinese Urban Reform, 1895-1937. (Cambridge: Harvard University Asia Center, 2000). 4 different rulers in the past 100 years.31 Tsin conducted a research of social and political culture of Guangzhou in the early 20th century.32 Taking Tianjin as an example, Ruth Rogaski reveals how hygiene crucially affected the formation of Chinese modernity.33

Modern Shanghai, as the economic center of the Far East, is a city that many scholars pay close attention to. From the perspective of economic history, Niv Horesh explains how Shanghai became a world-famous megacity today.34 Yingjin Zhang compiled a collection which took the cinema as the starting point to study urban culture in shanghai.35 With an approach of everyday life, Wen-Hsin Yeh studies the social and cultural history of Shanghai, covering its entire modern period from the Opium War to the founding of the PRC in 1949.36

Chinese scholars began research on the urban history of China in the mid-1980s. Modernization research into four cities, Shanghai, Tianjin, Chongqing, and , has been listed as a national subject in the Seven-Five Plan. There came out fruitful works about modern urban history.37 Meanwhile, many scholars started to research modern urban history in other cities, such as Beijing, Suzhou, Jinan, etc.38 Some scholars studied urban development in a longer historical period or a broader geographical scope. He Yimin expounded the origin, development and evolution of Chinese cities in thousands of years and summarized their features of urban style, economy, society, urban planning and construction in different times.39 He also reveals the important role of medium-sized cities in the urban system of Western China.40 Wei Yingtao studied the national-wide modern urbanization, pointing out that unlike the industrialization of western countries, China’s modern urbanization was the process of commercialization

31 Soren Clausen, Stig Thogersen. The Making of a Chinese City: History and Historiography in Harbin. (Armonk: M.E. Sharpe, 1995). 32 Michael Tsin. Nation, Governance, and Modernity in China: Canton, 1900-1927. (Stanford: Stanford University Press, 2000). 33 Ruth Rogaski. Hygienic Modernity: Meanings of Health and Disease in Treaty-Port China. (Berkley: University of California Press, 2004). 34 Niv Horesh. Shanghai, Past and Present: A Concise Socio-Economic History, 1842-2012. (Brighton: Sussex Academic Press, 2014). 35 Yingjin Zhang, ed. Cinema and Urban Culture in Shanghai, 1922-1943. (Stanford: Stanford University Press, 1999). 36 Wen-Hsin Yeh. Shanghai Splendor: A Cultural History, 1843-1949. (Berkley: University of California Press, 2007). 37 These four cities have published their modern urban history and some special studies, with a wide range of content including society, politics, economy, business, culture and management. For example, Zhongli Zhang, ed. Modern Shanghai Urban Study (1840-1949), (Shanghai: Shanghai People’s Publishing House, 1990); Yingtao Wei, ed. Modern Urban History of Chongqing. (Chengdu: Sichuan University Press, 1991); Shuwei Luo, ed. Modern Urban History of Tianjin. (Beijing: China Social Sciences Press, 1993); Mingxiu Pi, ed. Modern Urban History of Wuhan. (Beijing: China Social Sciences Press, 1993); Shanmin Peng. Public Health and Urban Civilization in Shanghai 1898-1949. (Shanghai: Shanghai People’s Publishing House, 2007). 38 For example, Zemin Su. Urban Planning History of Nanjing. (Beijing: China Construction Industry Press, 2008); Weiping Wang. A Study on the History of Jiangnan City in Ming and Qing Dynasties: Focusing in Suzhou. (Beijing: People’s Publishing House, 1999); Yu Li. The Start of ’s Modernization. (Changsha: Hunan Education Press, 2000.); David D. Buck. Urban Change in China: Politics and Development in Tsinan, Shantung,1890-1949. (Beijing: Peking University Press, 2010.); Benshu Xie and Jiang Li, ed. Modern Urban History of Kunming. (Kunming: Yunnan University Press, 1997). 39 Yimin He. Chinese Urban History. (Wuhan: Wuhan University Press, 2012). 40 Yimin He. Medium Sized Cities and Regional Development in Western China in the 20th Century (Chendu: Bashu Publishing House, 2005). 5 and urban transformation.41

Since the economic reform, China’s cities have developed rapidly. In the past forty years, China has gone through the equivalent of a century of western urban development. Urban planning cannot keep up with urban development, and urban studies cannot follow the pace of development. There is no precedent for the study of contemporary Chinese cities. The most common topics in current urban research are China’s urbanization and problems, the household registration system and population, urban new immigrants.42 These studies mainly emphasize an economic and policy perspective, when less attention is paid to cultural integration, civic awareness, and urban life.

The author chooses Shenzhen as the research city, where she worked and lived for more than 13 years, because it is the fastest-growing city in the world43 and the benchmark of China’s new generation of cities. Shenzhen has developed from a small border town to a megacity, with remarkable achievement in various aspects of society, economy, and culture. With the establishment of the Guangdong-Hong Kong-Macao Great Bay Area (GBA), Shenzhen was appointed as the demonstration pilot zone for socialism with Chinese characteristics44 and continued to occupy a strategic position in China's new round of developmental vision. In the transitional period, it is necessary to figure out how the city was shaped and how it can be better developed in the future. At the same time, Shenzhen's experience and lessons can be used for reference by other cities in China which are still undergoing rapid urbanization.

Studies of Shenzhen often refer to its relations with Hong Kong. The establishment of the Shenzhen Special Economic Zone (SSEZ) in 1979 has benefited from the geopolitical relations with Hong Kong. Shenzhen’s early development relied on Hong Kong’s capital investment, advanced technology, and management experience. The city’s early urban planning and management also consulted the Hong Kong model. conducted a social survey in 2007, researching the similarities and differences between Shenzhen and Hong Kong in traffic management, medical security, education, public utilities, human resources, securities market, and other aspects.45 Professor Ho PuiYin detailed the urban planning and development of Hong

41 Yingtao Wei, ed. A Comprehensive Study of Different Types of Cities in Modern China. (Chengdu: Sichuan University Press, 1998). 42 For example, Aimin Chen, Gordon G. Liu and Kevin H. Zhang, edited. Urban Transformation in China. (: Ashgate, 2004); John R. Logan, edited. The New Chinese City: Globalization and Market Reform. (Great Britain: Blackwell, 2002); T. G. Mcgee, George C.S. Lin, Andrew M. Marton, Mark Y. L. Wang and Jiaping Wu. China’s Urban Space: Development Under Market Socialism. ( and New York: Routledge Taylor & Francis Group, 2011). 43 Ezra F. Vogel, Foreword, : China’s Post-Mao Experiment from Special Zone to Model City, edited by Mary Ann O’Donnell, Winnie Wong, Jonathan Bach. (Chicago: The University of Chicago Press, 2017), vii. 44 The Central Committee of the CCP and the State Council issued the Guideline to Support Shenzhen in Building a Demonstration Pilot Zone for Socialism with Chinese Characteristics. Details see http://www.gov.cn/xinwen/2019-08/18/content_5422183.htm (access on 7/10/2019). 45 Tanyu Jiang. Comparative Study of Shenzhen and Hong Kong. (Beijing: People’s Publishing House, 2007). 6

Kong from 1841 to 2000, 46 which described the maintenance of the ecological environment, the provision of public housing, the establishment of public transport, and urban management experience, were the most valuable lessons for Shenzhen.

Some research on Shenzhen concentrated on macro-political and economic policies and decision-making events in the economic reform. 47 When Shenzhen lost its advantages as the SSEZ, Shenzhen’s industrial development and urban transformation and upgrading became a research focus, such as new urbanization research, cultural industry, and high-tech industry research.48 These studies provide valuable sources of the developmental direction of Shenzhen and its districts. In the area of urban development, due to the rapid development and some administrative measures, Shenzhen has become a city without peasants,49 accordingly, a city with the largest amounts of urban villages. For the city’s future, Shenzhen must rely on the transformation of urban villages. Thus, the study of urban villages is becoming a hot topic.50

When designers and scholars recognized the complexity of cities, urban research gradually trended to multidisciplinary integration. Many researchers started to consider social, economic, cultural, ecological, and other comprehensive factors in their urban research and projects. Learning from Shenzhen examines migrant labor, urban villages, sex workers, the Second Line,51 citizens’ identities, transportation, creative

46 Ho Pui Yin. History of Hong Kong’s Urban Planning 1841-2015. (Hong Kong: Chung Hwa Book Co. (H.K.) Ltd, 2016). 47 For example, Tanyu Jiang. History of Shenzhen’s Reform and Opening. (Beijing: People’s Publishing House, 2010); Ying Fu. A Brief History of Significant Reform and Innovation in Shenzhen. (Beijing: Social Science Academic Press, 2017). 48 For example, Shenzhen Municipal Academy of Social Sciences & Shenzhen Guangming New District Administrative Committee, ed. Shenzhen’s Practice in New Urbanization. (Beijing: China Social Sciences Press, 2016); Wuya Zhong. Research on the Selection of Leading Industries in Shenzhen. (Beijing: China Social Sciences Press, 2016); Xiaoru Zhang, Fayu Huang. International City and Shenzhen Strategy. (Shenzhen: Haitian Press, 2014); Weili Wang. From the Edge to the Center: Research in Shenzhen Cultural Industry. (Beijing: People’s Publishing House, 2007); Comprehensive Development Institute. Quality of Urbanization Transferring and Upgrading. (Beijing: China Economic Publishing House, 2015). 49 In 2004, the Shenzhen local government nationalized all the rural collective land and turned 270,000 peasants to urban household population, making Shenzhen a city without rural areas and farmers. 50 Urban village is a special form in the process of rapid urbanization. Although all or most of the cultivated land is expropriated, the farmers are still living in the original villages, which become urban residential areas. In order to obtain land and space for development, Shenzhen carried out unified land conversion twice, in 1992 and 2003, respectively. It became the only city without rural areas and farmers in China, but farmers’ own houses were preserved. Most of the village buildings were built to illegal height, which did not conform to fire safety standards and were of poor construction quality. Most of the houses in urban villages are rented to the new workers and low-income people, which, to some extent, solves the housing problem of low-income people in Shenzhen. At present, there are more than 1000 villages in Shenzhen, which accommodate more than 7 million people, and occupy about 320 square kilometers of urban land. The Southern Metropolis Daily sent reporters to track the in-depth coverage of various issues and events in Shenzhen urban villages, and published a book There are no Urban Villages in the Future. (Beijing: China Democracy and Law Press, 2011). David Wang uses Shenzhen as an example to study urban villages problems in China. Da Wei David Wang. Urban Villages in the new China: Case of Shenzhen. (New York: Palgrave Macmillan, 2016). Peilin Li studies the system, operation, social network, social stratification and daily life of urban villages by interviewing the residents of 22 villages in Guangzhou. Peilin Li. The End of the Village: The Story of Yangcheng Village (Beijing: The Commercial Press. 2004). 51 Shenzhen’s Second Line was a special zone management line constructed in 1982 to separate the SEC and non-SEC. It was a total of 84.6 kilometers long with 2.8 meters high wire mesh and patrolled roads along the whole line. In May 2010, SEC got the approval from the State Council to expand the territory of SEC to the whole Shenzhen city, then the Second Line existed only in name. It was officially 7 city, and public health.52 Juan Du starts with Shenzhen’s farmers and fishmen, and their ordinary lives, to uncover Shenzhen’s secrets regarding its rapid urbanization and economic development.53 These topics are more about social issues, which inspire the author to look at the city from different perspectives.

In the author’s practices of urban planning, with in-depth communication with local governments and developers, as well as conversation with ordinary people to understand their demands in the site investigation of projects, the author felt that she needed to adjust her idea of the city which has been based on physical spaces. The thesis is to integrate theories of design and sociology and combine theory and the author’s practices to conduct urban research of Shenzhen. Drawing on Henri Lefebvre and David Harvey’s theories in space, the author re-thought the development process of Shenzhen and its driving force.

The development of Shenzhen started with establishing processing zones with government’s preferential policies to attract foreign direct investment. The earliest construction was the Shekou (蛇口) Industrial Park with the area of 214 hectares54 and the Luohu (罗湖) Commercial Center with the area of 280 hectares,55 then extended to Bagualing (八卦岭) Industrial Park56 and Shangbu (上步) Industrial Park57 which supported the Luohu Management Zone and Shangbu Management Zone (now Futian (福田) District), and the High-tech Park near the Shenzhen University. To meet the developmental needs of the shipping industry, the eastern Yantian (盐田) Harbor and the Western Harbor (composing of Shekou Harbor, ( 赤湾) Harbor and Dachanwan (大铲湾) Harbor) were developed. With the city center moving westward to form the Futian CBD District, the Special Economic Zone (SEZ) inside the Second Line with the area of 327.5 square kilometers was developed (see diagram 1.1). Because of the rapid expansion and serious insufficiency of developmental space, Shenzhen implemented the urbanization in the whole city in 2003,58 which expanded the urban territory to about 2000 square kilometers. Baoan ( 宝安) District and Longgang (龙岗) District, which were outside the Second Line, became the new developmental focus. Shenzhen finally developed to form the urban pattern with multi- revoked in January 2016. 52 Mary Ann O’Donnell, Winnie Wong, Jonathan Bach, ed. Learning from Shenzhen: China’s Post-Mao Experiment from Special Zone to Model City. (Chicago: The University of Chicago Press, 2017). 53 Juan Du. The Shenzhen Experiment: The Story of China’s Instant City. (Cambridge: Harvard University Press, 2020). 54 Area data from Shenzhen Special Economic Zone Yearbook (1985),101. 55 Area data from Statutory plans for #01-01&02, Luohu District, Shenzhen. 56 Bagualing Industrial Zone is one of the earliest Industrial Zone constructed from 1982 in Shenzhen. It covers 116 hectares of land surrounded by Nigang West Road, Shaogang West Road, Hongling North Road and Shangbu North Road in Futian District. 57 Shangbu Industrial Zone is one of the earliest Industrial Zone constructed from 1982 in Shenzhen. It was originally an electronics industrial area and developed into a pivotal electronic component trading market in China in the late 1980s. In the 1990s, with the industrial restructuring, it developed into a comprehensive urban business zone, with an area of around 145 hectares, dominated by commerce, office and some residential area. The name was changed to , being familiar to the public. 58 On 23 October 2003, the Shenzhen Municipal Government issued the Notice on Accelerating the Urbanization of the Baoan District and Longgang District (No.192, Shenzhen Municipality [2003]). All the collective land was converted into state-owned land and all the peasants into urban household registration. 8 centers (see diagram 1.2). The urban spatial expansion of Shenzhen was a process dominated by industrial development, as well as a process of capital accumulation and expansion, reflecting the needs of economic development. Based on Henri Lefebvre and David Harvey’s theories of space, capitalism has achieved in growth and expansion globally “by occupying space, by producing a space.” 59 The issue of overaccumulation (surpluses of labor and capital) can be fixed by temporal displacement through investment in long-term capital projects or social expenditures, or spatial displacements through opening up new markets elsewhere. 60 The establishment of SSEZ coincided with “the turn to the neoliberal solution in Britain and the .”61 Thus, Shenzhen became an attractive place for capital.

Diagram 1.1: key development areas and Shenzhen district layout

Source: diagram drew according to the Shenzhen map (2018).

Diagram 1.2: Shenzhen spatial direction and structure in the1980s, 1990s, 2000s, 2010s

59 Henri Lefebvre. The Survival of Capitalism: Reproduction of the Relations of Production. Trans. Frank Bryant. (New York: St. Martin’s Press, 1976), 21. 60 David Harvey. The New Imperialism. (Oxford: Oxford University Press, 2003),109. 61 David Harvey. A Brief History of Neoliberalism. (Oxford: Oxford University Press, 2005),120. 9

10

Source: diagram drew according to the Shenzhen yearbooks (1985-2018) and Shenzhen maps.

Shenzhen has developed by utilizing foreign capital and conducting processing exports. The government’s finances have increased rapidly, and the local capital has been cultivated. Capitalists always aim at maximizing profits. To seek new spaces to gain more advantages, they “tend to be drawn or impelled to move to those locations where costs are lower or profit rates higher.”62 Therefore, the spatial expansion of capital inevitably “produces uneven geographical development, then the geographical landscape of capitalist production, exchange, distribution, and consumption is never in equilibrium.”63 Although Shenzhen has constructed the Second Line to separate the SEZ from the non-SEZ, the capital still flowed continuously to the lower-cost areas outside the Second Line, which exceeded the Shenzhen government’s plan. At the same time, the government lacked adequate administrative resources to manage this kind of unexpected expansion which led to the contrast between the rapid and orderly development of the SEZ within the Second Line and the disorderly construction of the Longgang District and Baoan District outside the Line.

Harvey argues that government plays a key role in urban development, but he is more likely concerned about the problems in capitalist countries. He believes that government represents the interests of capitalists, and “dominant classes and hegemonic class alliances can form within the region and lend a specific character to political as well as to economic activity.”64 However, the “developmental state” applied in East Asia is quite different from the “regulatory state” represented by the US. “In states that were late to industrialize, the state itself led the industrialization drive, that is, it took on developmental functions. These two different orientations toward private economic activities, the regulatory orientation, and the developmental orientation, produced two different kinds of business-government relationships.”65 As indicated by Chalmers Johnson, one of the remarkable features of the developmental state is that

62 David Harvey. The New Imperialism. (Oxford: Oxford University Press, 2003), 94. 63 Ibid., 96. 64 Ibid., 103. 65 Chalmers Johnson. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975. (Stanford: Stanford University Press,1982),19. 11 the government gives direction to industrial policy. The Chinese model is a kind of developmental state, but self-proclaimed as a model with socialist characteristics, which is different from the Japanese Model. Japan focused on a primary and nationally supported goal for its economy, instead of governing economic activity through particular procedures, 66 while China’s government emphasized both. Ideally, a developmental state is a government with sufficient organization and power to achieve its development goals and able to resist the demands from capital for their short-term interests. However, in the early stage of development, the Shenzhen Municipal People’s Government (SMPG) had to rely on foreign capital for urban development because of its weak fiscal resources. Therefore, to attract foreign capital, the government was always committed to creating a good investment environment and introducing policies and measures conducive to investment.

Another perspective on developmental state theory is the work by William Kirby. He points out that in the period of Chiang Kai-shek’s Nanking government, the National Resources Council was founded to work out the Three-Year Plan in 1936, which sought to promote a “controlled economy” during war-time. 67 It meant all things were according to plan and all industry were state-owned. Kirby names it as “state socialism”, and, better, “state capitalism”.68 Although most projects of the Plan were undone due to over-reliance on German funds and the onset of the Sino-Japanese War in 1937, the Three-Year Plan was a dramatic achievement, which was the seeds of developmental state in China. Kirby also claims that China is the engineering state, which is a society led by engineers, focusing on the development of infrastructure as a platform for the country’s economic growth and social well-being.69 In the early stage of Shenzhen’s development, the urban impression was that the whole city was like a big construction site with dust everywhere. Because at that moment, the Shenzhen government had to focus on the infrastructure construction to build the urban physical spaces and environment to attract investment on the one hand, and to develop the local economy and accumulate capital on the other hand. With a certain achievement of capital accumulation and the improvement of urban governance, the government’s policies and measures have been changed to restrict and balance the expansion of capital (including foreign and local capital) and the well-being of the city and its citizens. While continuing the construction of infrastructure and real estate, the Shenzhen government has already begun to upgrade and transform industries led by high-tech and innovative industries in order to gain the development advantages in the post-SEZ era.

The gradual economic reform which was adopted by China needs a strong central state 70 to control the reforming process and direction. However, the relationship

66 Ibid., 20. 67 William Kirby. and Republican China. (Stanford: Stanford University Press, 1984), 209. 68 Ibid. 69 Regina Abrami, William Kirby, Warren McFarlan. Can China Lead? Reaching the Limits of Power and Growth. (New York: Harvard Business Review Press, 2014), 56. 70 See Leong H. Liew. “Gradualism in China’s economic Reform and the Role for a Strong Central State”. Journal of Economic Issues, Vol 29. No. 3 (1995), 883-895. 12 between government and capital is not so simple. In the past decades, capital has penetrated all aspects of urban development, and the competition between government and capital is becoming more and more intense and complex. Many local governments fell into the embarrassing and contradictory situation of being co-opted by capital, such as land finance, at the same time, they still attempted to restrict and balance capital expansion.

1.2 Housing Research in Multi-perspectives There are many topics about urban development. An independent subject but closely related to other systems can be the starting point for research. Housing is “a major component of a nation’s infrastructure”.71 The residential building is the most massive and common type of construction in a city. Also, it is closest to the livelihood, linking with other urban functions, such as transportation, education, consumption, etc. Thus, Housing is one of the indicators reflecting the level of urban development and people’s living standards. Shenzhen was built by people from all over the country. Its population increased from around 300,000 to nearly 20 million. Shenzhen is transforming from an immigrant city to a settled city. Solving the housing problem of a large population and providing corresponding public facilities and services have always been problems faced by the Shenzhen government.

In the context of globalization, urban competitiveness greatly depends on the city’s creativity. Peter Hall believes that the formation of creativity depends on a certain group of people in a certain period. Only the city can provide the opportunity to these people with different cultural backgrounds to gather in the city, interacting with each other to form a specific atmosphere of innovation and continuing to create new ideas. 72 Charles Landry points out that cities have the most important resources—their inhabitants. He suggests that people’s needs, motivations, and creativities are replacing the location, natural resources, and market accessibility as resources for urban development. 73 Therefore, the competition of talents is the core of urban competitiveness. The affordability and quality of housing and living environment are key factors in the competition for human talents.

Although Shenzhen has succeeded in economic transformation, the unaffordable housing price has made Shenzhen less attractive to talented people. Therefore, it is high time to study Shenzhen housing development to understand how today’s residential environment was formed and to investigate how Shenzhen can be shaped better, attracting and retaining talents and realizing the transformation and upgrading of the city in the new developmental period.

Homes are the core ingredient of neighborhoods, villages, and towns. Together with

71 Andrew Golland and Ron Blake, ed. Housing Development: Theory, Process and Practice. (London and New York: Routledge, 2004), 4. 72 Peter Hall, Cities in Civilization: culture, Innovation, and Urban Order. (London: Phoenix Giant, 1999). 73 Charles Landry and Franco Bianchini. The Creative City. (London: Demos, 1995). 13 community facilities and local roads, houses make up the “residential landscape”.74 Thus, housing research often comes with a community or neighborhood. The concept of community was first put forward by Ferdinand Tonnies, who believed community consisted of people sharing the same values and was characterized by identity, emotionalism, and traditionalism. 75 After that, there emerged many definitions of community, mostly around a certain place and people and a certain number of social relations.

1.2.1 Theory of Neighborhood and Community The combination of community theory and planning practice led to the implementation of community construction in real spaces. Clarence Perry created the theory of the “Neighborhood Unit” 76 in 1929, which was the theoretical model of residential planning in the 20th century. Although the theory of the Neighborhood Unit is still relevant in today’s community planning, designers need to apply it flexibly according to the specific conditions of the project. Mumford suggested that people’s community awareness could be strengthened through effective spatial planning and design. Public open spaces would encourage people’s daily contacts and be conducive to the formation of residents’ regional sentiment, sense of belonging, and community awareness.77 Nowadays, many developers create community image by building a community landscape environment and cultural atmosphere to attract buyers. In order to revitalize the declining urban center in the UK’s cities, David Rudlin and Nicholas Falk proposed “Sustainable Urban Neighborhood”, 78 which was eco-friendly, sustainable, convenient, efficient and energetic. Although it was based on the revival of the British city center, for the community to achieve environmental and social sustainability, this theory is an important and valuable reference.

Modern China’s community concept originated from Tonnies’s idea and was introduced by Fei Xiaotong79, but did not make much progress before China’s economic reform. Only after the commercialization of housing, has the research of community and living environment gained great attention. Professor Chen Bingzhao and Wu Zhiqiang from Tongji University presided over the research on the Sustainable Development Model and Evaluation System of Human Settlements in China in 1999 and published a series

74 Andrew Golland and Ron Blake, ed. Housing Development: Theory, Process and Practice. (London and New York: Routledge, 2004), 5. 75 Ferdinand Tonnies, translated and edited by Charles P. Loomis. Community and Society. (Mineola, N.Y.: Dover Publications, 2002). 76 Clarence Perry was an American planner, sociologist. He was an early promoter of neighborhood community and recreation centers. He became a strong advocate of the Neighborhood unit when he worked in the planning department. In the case of car traffic becoming popular, he suggested that research on the residential area should begin with the family life and its surroundings— the neighborhood, so as to create a comfortable, safe, well-equipped, friendly living environment. Details see Clarence Perry, “The Neighborhood Unit, a Scheme of Arrangement for the Family-life Community”, Regional Plan of N.Y. Regional Survey of N.Y. and Its Environs, Vol7 (1929). 77 Lewis Mumford. The Urban Prospect. (London: Secker & Warburg, 1956). 78 David Rudlin & Nicholas Falk. Building the 21st Century Home: The Sustainable Urban Neighborhood. (Oxford: Architectural Press, 1999). 79 Fei Xiaotong (1910-2005) received his PHD from School of Economics and Political Science, the University of London in 1938, and was selected as the academician of the School in 1982. He was one of the founders of Chinese sociology and anthropology. 14 of articles.80 Yu Qi mainly discussed the construction and morphological changes of the Shanghai residential area during the transition period from the aspects of design and spaces.81

1.2.2 Housing Development in China and Shenzhen China's modern real estate industry originated in the concession areas, which once flourished in Shanghai, Tianjin, Guangzhou, Xiamen, Hankou, Nanjing and other major open ports and political power centers. Referring to the Western real estate model and combining with local conditions, it formed a series of related industries, such as land transactions, housing development, sale and lease, finance, design, etc.82 At that time, the houses were designed according to the local conditions and people's needs, forming different characteristics in different cities, such as western-style houses, alleyway houses in Shanghai, courtyard houses in Beijing, etc. After 1949, the real estate industry stopped abruptly as the housing welfare distribution system began to be implemented. Houses became standardized products, and people lived in the same houses in different cities. After the economic reform, the commodification of land and housing have been rediscovered. Chinese people have regained the right to choose housing. The design of housing was constantly innovating based on people's living needs. A team of experts from the School of Architecture of and Graduate School of Design of Harvard University have analyzed the development in the types of residential buildings over 160 years in China from 1840 to 2000 by studying political, economic, social, technological, cultural and other changes.83 It is currently the most complete residential research with sufficient data covering a long period in China, which is of great reference value for my project.

Housing has a clear geographical feature, linked closely to climate, living habits, and the level of economic development. Shenzhen, located in the south of China, is a typical immigration city with unique population structure and background; thus, it has its own characteristics in community and housing construction. From the perspective of the relations between residential product and market, Mao Wei and Wang Xiaomo discuss the evolution of housing in the market and make a comparative study on the housing types and the development process of Shenzhen housing construction.84 This book focuses on the interpretation of housing design and technology in Shenzhen, providing my research many sources on housing projects in Shenzhen.

The China Merchants Real Estate, born and developed in Shekou, explored and summarized its concept of comprehensive community development in the

80 The subject lasted for four years, conducting empirical research of living environment in the eastern developed areas (Shanghai) and central and western regions (Henan, Yunnan and Sichuan province). 81 Qi Yu. Production and Morphogenetic evolution of Urban Residential Space in Shanghai during the Transitional Period. (Nanjing: Southeast University Press, 2011). 82 Jin Zhao. History of Urban Real Estate Industry in China (1840-1949) (Tianjin: Nankai University Press, 1994). 83 Junhua Lv, Peter G. Rowe and Jie Zhang, edited. Modern Urban Housing in China 1840-2000. (Beijing: Tsinghua University Press, 2002). 84 Wei Mao and Xiaomo Wang. Revolution of Living. (Beijing: Haichao Press, 2000). 15 development of Shekou Industry Park, which is similar to the theory of New Urbanism in the United States. China Merchants’ comprehensive community is a multi-functional development, focusing on human nature and comfort, with the features of cultural symbiosis, scale economies, and social coordination.85 However, such a community model was unique in the early stage of Shenzhen. Although the China Merchants copied this model to other cities in China and countries along the One Belt One Road,86 this model could only be developed in a relatively large scale and independent area.

1.2.3 Multi-disciplinary Approach on Community and Housing Research Many scholars have realized that people’s daily residence is affected by social, economic, and cultural factors. Therefore, a multi-disciplinary approach to community and housing research has been carried out. Lawrence studies what made a house a home in a smaller dimension. He suggests the design, the meaning, and the use of home interiors are intimately related to a range of cultural, sociodemographic, and psychological dimensions.87 Wang Ying and Yang Guiqing start from the sociological view to study the problems of community stratification and segregation, changes in family needs, neighborhood relationship reconstruction, and aging issues in the Shanghai community during this period.88 These analyses focus on how community and people’s lives are affected by economic development and changes in policy systems, etc., without considering, in turn, how human residential activities and habits influence the community and, further on, real estate developers and related government policies, which is an area that this thesis is about to investigate.

The author agrees with Ron Blake and Andrew Golland’s suggestion that housing development is a multi-faceted process in which vertically all aspects of everyday life have some input.89 When Lu Hanchao studied everyday life of early 20th century Shanghai, he incorporated much material about housing and residence. He described the different types of dwelling in Shanghai at that time, including western-style houses, alleyway houses, and shanties.90 Then he focused on how shantytowns and alleyway houses were formed, how the spaces and neighborhoods were laid out, how they changed over time, and how they affected people's daily life. Through the study of the daily life of “little people”, Lu discovered the persistence of the tradition out of the modernity and westernization of Shanghai. Meanwhile, he pointed out pragmatism was the dominant way of ordinary people’s thinking, which incorporated “whatever was appealing and available to make life better”.91 Everydayness is usually associated with

85 Zheng Hu, Shaobin Lin and Xinzhi Lu. The China Merchants and the China’s Real Estate Industry. (Beijing: Zhonghua Book Company, 2010). 86 Jian Zhong. Dream Workshop of Reform and Opening-up: 40 Years of Development and Construction of China Merchants Shekou Industrial Park 1978-2018. (Beijing: Science Press, 2018). 513-517. 87 Roderick J. Lawrence. What Makes a House a Home? Environment and Behavior, Vol. 19 No. 2, March 1987. 154-155. 88 Ying Wang and Guiqing Yang. Urban Community Construction in the Period of Social Transformation. (Beijing: China Architecture & Building Press, 2009). 89 Andrew Golland and Ron Blake, ed. Housing Development: Theory, Process and Practice. (London and New York: Routledge, 2004), 4. 90 Hanchao Lu. Beyond the Neon Lights: Everyday Shanghai in the Early Twentieth Century. (Berkley Los Angeles London: University of California Press, 1999), 110. 91 Ibid., 295, 296. 16 pragmatism. Everyday Modernity in China sees “everyday as a productive seam from which to address issues of modernity and identity, particularly in a non-Western context”. 92 Among the volume, Hanchao Lu’s essay discusses ordinary people’s culture by focusing on how Shanghai residents in the late Qing dynasty responded to new technologies related to their basic necessities of daily life. 93 Inspired by the approach of everyday life, the author has found a way to study residential development and other urban facilities from the everyday life of ordinary people.

1.2.4 Perspectives of Everyday Life This thesis draws on theories of everyday life to understand people’s daily life related to dwelling. By understanding people's demands and behaviors in daily life, it is to investigate how people can realize their respective interests to some extent by choosing, transforming and using residential space, community public space and facilities. It is exactly as Ben Highmore argues, that “everyday life in modernity is a dynamic process: making the unfamiliar familiar; getting accustomed to the disruption of custom; struggling to incorporate the new; adjusting to different ways of living. In attempting to make everyday vivid, phantasmagoric representation is replaced by practical, poetic and critical operations”.94 Especially for the long-term use of housing, people need to constantly adjust their behavior and transform home spaces to find a comfortable balance based on new circumstances, such as changes in family members' structure, and purchase of new appliances and furniture.

Michel de Certeau conducted more detailed observation and study of daily life in residential space and the neighborhood. He proposed that society was composed of some certain practices, thus, to understand the impact from ordinary people in the construction of social reality and social development, an understanding of the practice of everyday life of ordinary people in the society was of paramount importance. The spatial practice was the core theme of Certeau’s theory in the practice of everyday life. In a neighborhood, people’s access and use of public space, the way of communication, the home layout and cooking habits, reveal their consumption and behavioral tactics. Through these practices, in the spaces provided by the ruling elites, ordinary people have added their own goals and aspirations under the delicate balance of maintaining all of the interests, so that the spaces containing the symbols and institutions become suitable for the individual practice and can benefit the individual interests as well.

This research aims to set Certeau’s theory of everyday life into Shenzhen's urban historical and spatial context to test the spatial composition and daily use of Shenzhen's housing and community. With the development of Shenzhen city, not only the population was increasing, but also the population structure was changing.

92 Madeleine Yue Dong and Joshua Goldstein, ed. Everyday Modernity in China. (Seattle: University of Washington Press, 2006). 93 Hanchao Lu. “Out of Ordinary: Implications of Material Culture and Daily Life in China”, Everyday Modernity in China, edited by Madeleine Yue Dong and Joshua Goldstein, ed. (Seattle: University of Washington Press, 2006), 22-51. 94 Ben Highmore. Everyday Life and Cultural Theory: An Introduction. (London and New York: Routledge, 2002), 2,16. 17

Therefore, people demanded different housing and living facilities in different stages. This research focuses on four main factors which relate to ordinary people’s everyday life and affect their housing choice, that is house and community, transportation, children’s education, and age care. It explores how ordinary people’s everyday life and decisions affect the decision-making of developers in housing development and influence the government in the urban function layout, traffic management, school locations, and so on.

1.3 Sources and Methods As this is a contemporary historical study, the sources of data are different from those of modern or ancient studies, which mainly focus on archives. This thesis only used part of the archives of the China Merchants. Most of the government policies and statistics were collected from government websites and Yearbook publications. There is no doubt that the Internet as a means of information searching and collecting has proliferated since the 1990s. With the popularity of the Internet and the implementation of the paperless office, most government departments and enterprises have built up their own official websites where news and relevant information are published.

Some people questioned the accuracy of the Chinese government's data, so the author compared and confirmed it through data from other agencies. Taking house prices as an example, the official prices were compared with the data of several major real estate intermediaries. For the average house prices of the city, the government data was used, while for the prices in specific areas, the author preferred to use data of real estate intermediaries, because, in a small range, the intermediary data was more real-time and accurate. For the population data, the statistical data only counted the population with household registration and residence registration. Some of the floating population in Shenzhen were unwilling to register for residence, so the population in the statistical data was not the total resident population in Shenzhen. The concept of managing population was put forward in Shenzhen Master Planning 2006. According to a government official the author interviewed, it was very difficult to calculate the managing population. They tried different methods and thought it was relatively accurate to use water consumption to estimate the resident population. Because this was only an estimate, the data would not be published on the official website, but only appeared in some leaders' speeches. In view of these uncertainties, this thesis used the population data from the statistical yearbook. As long as the statistical caliber was the same every year, the trend of population change was relatively accurate.

Mapping and Visual material are essential for this research. Mapping sources, including urban planning layout and building design drawings, city maps and GIS maps, can clearly express the city’s functional layout, road and traffic organization, and open space system, etc. For specific projects, design drawings can help to understand the design concept, floor plan layout, relation between buildings and environment, and so on. Visual materials include photos, pictures, advertising, housing brochures which can

18 be collected by myself, provided by interviewees, posted in newspapers and internet, and collected from sales offices of real estate companies. Visual materials directly record buildings, spaces, and people's living conditions.

To understand people’s everyday life and the condition of houses and communities, oral interview and field research were conducted in Shenzhen. People have fresh memories about their lives and the development and transformation of Shenzhen city in the past four decades. Shenzhen’s residential buildings and urban spaces of each period are still being used. Through the interviews and field research, people’s everyday life can be restored to a certain extent.

1.4 Research Framework and Thesis Outline Shenzhen is an emerging city in China’s economic reform with uncommonly rapid development. Its urban research is lagging behind its development. Multi-disciplinary housing study in China is relatively weak, while the attention to ordinary people’s housing and everyday life is relatively insufficient. It is necessary to study Shenzhen's housing development from different perspectives and frameworks, and further to provide experience and lessons for the development of other cities in China.

In this research, the author suggests that housing development is a process of competition and cooperation among the government, the developer, and the buyer. This thesis puts three groups in the housing system together in a framework to conduct the research systematically in multiple perspectives by combining the theory of planning and social science. It aims to fill the gap and provide a new direction for housing research in China’s contemporary cities.

In the commercial housing system (see diagram 1.3), the government stations on the upper level, controlling the land supply and financial resources, formulating housing policies to encourage or restrict the construction and purchase, doing urban planning and infrastructure construction. The developer stations between the government and the buyer. Developers need to obtain land use rights from the government and work out a developmental plan to get government approval. They also need to pursue financial support from banks. By doing projects successfully, developers contribute to increasing local employment, tax revenue, and adding values in the region. Thus, they get the discourse power to influence the urban development. As to the home buyer, developers study their needs and lifestyle and build up quality housing and community, to create well-designed living environment and lifestyle for the future dwellers, not only to meet, but also to design and affect dwellers’ aspirations. Standing at the lower level, the buyers express their opinions by using the right of choice. They usually consider the price, location, traffic conditions, service facilities, community quality, also concern about the floor plan layout, orientation, and views. Although the choice of the buyer is within the range provided by the government and the developer, their choice can still make the developer adjust the development strategy and improve the design and construction quality and also affect the government to adjust the urban planning and

19 the layout of public facilities. After moving and settling down in the new home, buyers can affect the formation of the living environment and community-style through their practice of everyday life, and further to affect the appearance of the urban region.

In the affordable housing system, it is the government’s responsibility to provide affordable housing. Because of insufficient funds, the government develops attractive policies and measures to invite developers’ investment in building affordable housing. And the government works out the standards and procedures for the application of affordable housing so as to ensure the coverage and principle of fairness.

Diagram 1.3 Commercial housing system

Based on this housing system model, this thesis is going to examine the housing development in Shenzhen from 1979 to 2018 and accomplish the following four objectives. First of all, it will explore how the government controlled urban housing development. The second is to explore how developers responded to government policies and satisfied buyers’ requirements in housing. Then, to demonstrate how ordinary people chose their housing and affected housing development in their everyday life. And finally, it is to figure out how the government, the developer, and the buyer formed a joint effort to promote urban development.

The city is a complex system, and the housing problem is a long-term problem in each region. The housing development is a systematic project, involving multiple interests and many urban subsystems. Therefore, it is difficult to be solved singly. The purpose of this thesis is not to propose a solution, but to sort out what / why has been done in a more comprehensive way from different perspectives, and identify the key factors which should be the main foci in the future housing development.

Apart from the introduction and the conclusion, the main body of this thesis is divided into four chapters, which is based on the three main competitors in the housing development in China.

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Chapter two is on the role of government. Shenzhen became a city from a border county because of the national policy of economic reforms; thus, the role of government was very important in the development of Shenzhen. The government constantly explored urban construction and management in the system that never appeared in Chinese history. This chapter focuses on three aspects of the government’s role in housing development, including land supply, housing policies, and urban planning. It also explores the different roles of the central government and the local government.

The real estate industry emerged in the commercialization of housing and became a pillar industry in China. Real estate companies also emerged as the times required and achieved remarkable development. Chapter three is on the role of developers. Taking Vanke as an example, it examines how real estate developers responded to the government’s variety of real estate control policies and promoted the housing development in Shenzhen. It also explores how developers satisfied people’s ever- changing requirements for housing and community environment, changed people’s knowledge and demands on housing, and unnoticeably affected people’s everyday lives. It further discusses how real estate companies become resource integrators to form a joint effort to promote urban development in China.

Chapters four and five are on the main factors affecting Shenzhen people’s everyday life, which further affect people’s choice of housing. Shenzhen is an immigrant city with a special demographic structure and population background. Shenzhen people had very different housing choices in different stages. Through interviews and questionnaires, people’s standards of housing choice, the way people used community space and facilities, and their interaction with developers and the government are explored in these two chapters. Chapter four focuses on the evolution of housing and community and transportation. The quality of houses and communities and the convenience of transportation have always been important criteria for people to choose housing. Chapter five is on education and pensions, which are growing concerns of people in their housing choices.

The final chapter draws conclusions based on all the findings of this thesis. Besides the summaries of what/why happened in Shenzhen’s housing development, it points out the way in which the competition and cooperation of the government, developer and buyer is the driving force of Shenzhen’s housing development, and exercises a profound impact on urban development. It also attempts to figure out the main factor in the competition and cooperation and provides suggestions for building an affordable and livable city.

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Chapter two: The Role of Government

2.1 Introduction At the opening meeting of the 19th National People’s Congress (NPC) of the Chinese Communist Party (CCP) on October 18, 2017, Xi Jinping (习近平), the General Secretary of CCP, stated his position on housing as follows: “A house is for living, not for speculation”95 (房子只住不炒), which kicked off the new round of China’s housing system reform. After this, local governments launched corresponding housing reform measures in combination with their actual conditions.96 This process from the decision of the central government to the rapid follow-up and implementation by local governments demonstrates the route of introduction and implementation of China’s policies.

Although China is a developmental state and the central state has strong forces on urbanization and the development of cities in the economic reform, local governments still have opportunities to work out their own regulations. Moreover, Urban governance was affected by various external factors in different stages. Under the overall control of the central government, the struggle between local governments and capital and people accelerated or slowed down the process of urban development, making cities present different characteristics.

In terms of the urban housing development, the government stations on a dominant position, controlling the quantity and progress of land supply, formulating regulation and policies of housing reform, controlling financial resources, encouraging/restricting construction and purchase, planning the residential layout and specifying the developmental condition for each block through the urban master planning and detailed planning, and being responsible for the construction of infrastructure and public service facilities. Regarding the affordable housing, it is the government’s responsibility to provide affordable housing. However, because of insufficient funding, the provision of affordable housing is far behind the demand. Thus, the government

95 This is the direction of the development of property market defined clearly in the Central Economic Work Meeting in December 2016. http://finance.people.com.cn/n1/2016/1216/c1004-28956355.html (access on 4/9/2018) At the opening meeting of the 19th NPC of the CCP in October 2017, Xi Jinping affirmed and emphasized this positioning, and pointed out “we should improve people’s livelihood, strengthen and innovate social governance, strengthen the construction of social security system. A multi-level social security system will be built, covering the whole people, coordinating urban and rural areas, having clear rights and responsibilities, and ensuring moderate and sustainable development. We should adhere to the orientation that a house is for living, not for speculation and accelerate the establishment of a housing system, so that people can have a certain house to live.” http://cpc.people.com.cn/19th/GB/414745/414754/ (access on 4/9/2018) 96 For example, in the work report of Beijing Municipal Government issued on 24 January 2018, it was put forward that the working focus in 2018 is to restrict housing price and improve the security housing system, including renting, sharing property rights, leasing collective land for housing, encouraging industrial park to build worker’s dormitories. http://cn.chinagate.cn/reports/2018- 03/02/content_50637906.htm (access on 10/9/2018) Shanghai has issued a series of major housing reform policy adjustments in 2017. In 2018, Shanghai further strengthened the real estate market regulation and increase the construction and supply of affordable housing (including rental housing). Shanghai plans to invest 7 billion in the construction of affordable housing and start construction of 42,000 sets. In the first half of the year, there has started construction of 15,000 affordable houses. http://m.sh.bendibao.com/mip/195407.html (access on 10/9/2018) 22 needs to develop some attractive policies and measures to invite developers’ investment and social capital. Moreover, the government works out the aplication standards and procedures to ensure the coverage and principle of fairness.

The housing development of Shenzhen has gone through different stages in the economic reform. Shekou Industrial Park launched the first housing commercialization scheme in 1984, and in 1988, SMPG promulgated the “Housing Reform Plan of SSEZ” and officially began the first reform of the housing system. In 2018, SMPG started the second housing reform by focusing more on the affordable housing for talents and low- income population. This chapter focuses on the role of the government in the developmental path of Shenzhen in the past 40 years. It consists of three main parts, namely, land supply, housing policy, and urban planning, to review how the government guides the urban housing development, influencing the business strategy of the developer and affecting the everyday life of Shenzhen people. At the same time, the government constantly adjusts the strategy and policies upon being influenced by external factors. It is to clarify the role of government and the government-business relations and to reveal under the socialist market economy system, how a strong socialist government carries out urban development by making use of the needs of capital expansion while restricting and balancing this expansion.

2.2 Land Supply Back to the beginning of reform and opening up, the opportunity for the establishment and development of SSEZ lay first in its geographic relationship with Hong Kong, which attracted capital with sufficient land supply, low land prices and the low cost of the labor force. Hong Kong, a river away from Shenzhen, has become a financial and trade center in the Far East at that moment after the great development in the 1960s and 1970s. The price of land in the city was as high as 15,000 HK dollars per square foot, and it reached 500 HK dollars in the suburbs. Lack of labor and high wages were also big issues.97 The Hong Kong’s capital surplus was in need of outlets for development. The China Merchants eventually chose Shekou to develop its industrial park just because “it could not afford 5,000 square meters of land in Hong Kong even if it sold out all the property of the Hong Kong China Merchants.”98 Therefore, the low price of land and abundant and inexpensive labor in SSEZ were in line with the demands of market development, especially for Hong Kong’s capital. Because of its geographic and kinship relationships with the mainland, unlike those who hold the wait-and-see attitude in Europe, America, Japan, and other developed countries, Hong Kong capitalists were the most sensitive and responsive to the establishment of SSEZ. On November 1, 1978, Yuan Geng99 (袁庚), the new head of Hong Kong China Merchants,

97 See Shixiu Zhu, ed. History of the China Merchants (modern part). (Beijing: People’s Communications Press, 1995),180. 98 Qiao Tu. Yuan Geng Biography: The Reform Scene 1978-1984. (Beijing: Writers Publishing House, 2008),14. 99 Yuan Geng (23/04/1917-31/01/2016). He was the leader of the East River Column in the second Sino-Japanese War. He began to lead the Hong Kong China Merchants in 1978 and set up the Shekou Industrial Park. Under his leadership, the Shekou Port and the Chiwan Port were built. Later, he founded the and the Group. He was the key figure in creating the 23 made his first appearance at the Fulihua Hotel in Hong Kong, which attracted the attention of all circles in Hong Kong. More than 200 guests were celebrities, including Huo Yingdong (霍英东), Bao Yugang (包玉刚) and Dong Haoyun (董浩云). The major newspapers in Hong Kong reported the event in the next day.100

The government’s power to control the urban development, first of all, lies in the land supply which determines spatial direction, project location, and development cost. According to the Land Management Art of China, land in China includes urban land owned by the state and rural land owned by collectives. The land for urban development is all state-owned land. Governments at all levels formulate the plan for land supply in accordance with land planning, urban planning, and the superior supply plan. Each city formulates its long-term land use plan and annual plan, and launches land for construction accordingly. Before the economic reform, the land in China was distributed through government allocation (政府划拨), which meant land users gained the right of land use from the local government. It was free of charge, but without an explicit tenure of use. The land use free of charge can only reflect its characteristics as a resource. Although the central government had control over land use, the local government actually obtained the power to fully control the industrial process and investment scale of the construction according to the local circumstances. In particular, as the test of economic reform, SSEZ gained greater power to investigate new modes.

2.2.1 compensated-use of land and land auction In 1980, the early stage of SSEZ, the first development project, Luohu Commercial District (see diagram 2.1) had to do filling by bulldozing two small hills because of its low-lying terrain. It also needed to conduct basic construction such as water supply, power supply, road and land leveling (三通一平). The project only gained funding of 30 million yuan from state loan. Thus, Luo Jinxing (骆锦星), the deputy commander of the project, put forward a scheme of land leasing when facing financial difficulties. With the support from Wu Nansheng101 (吴南生), the Secretary of Shenzhen Municipal Party Committee (SMPC), the land leasing was put into practice after re-designating the land as compensated-use. As suggested by Harvey, capital tended to find new places with lower cost for reproduction, thus, the news that Shenzhen’s land could be rented was a great attraction for Hong Kong businesspeople with keen instincts. Hong Kong Dexing (德兴) was the first company to negotiate and sign a leasing contract with Shenzhen. It obtained a piece of land of 5,000 square meters in a core location of Luohu District and constructed Dexing Building. In only one year, Luohu District

second period of growth of the China Merchants and one of the most important pioneers of China’s reform and opening up. He was awarded the Gold Bauhinia Star by the Hong Kong SAR in 2003. 100 Tu Qiao. Yuan Geng Biography: The Reform Scene 1978-1984. (Beijing: Writers Publishing House, 2008), 24-28. 101 Wu Nansheng (8/1922~10/4/2018) was appointed Secretary of Guangdong Provincial Committee in March 1978, Chairman of Guangdong Special Economic Zone Management committee from May 1980 to July 1983. He organized three SEZs (Shenzhen, , ) in Guangdong Province, won the development autonomy for the SEZs, and insisted on introducing market economy, which was the main reason for the success of the SEZs. He was in charge of Shenzhen as the Secretary of the SMPC for a short period, from June 1980 to February 1983. He worked very hard to develop the Luohu Commercial Center and clear many obstacles for the development of SSEZ. 24 collected 213.6 million HK dollars by leasing land of 4.54 hectares.102 It was the first time in the PRC that land presented its capital value. Compensated-use of land is a common thing now, but it was a shocking move at that time. Many reformers criticized it as a traitorous action.103 Although acquiesced to by the central government, the SMPG suffered tremendous political risks and pressure of public opinion.

In its early stage, Shenzhen gathered its developmental funds through compensated- use of land. Although implementing the compensated-use, the right of land use was still allocated by the government, and the land fee was relatively low. The power of land management was highly concentrated into the hands of a few government officials. It was not hard to imagine that to gain access to land, developers had to establish some relationships (关系) with officials, which often involved bribery and corruption. Developers who had no relationship to get land inevitably felt unfairly treated, while even the companies who had obtained the land felt insecure, because the land had no clear tenure of use and the government had the right to take back the land at any time. Thus, they dared not put massive investment into the land quickly. Capital’s strong demand for a rapid expansion called for a more equitable and reasonable method of land leasing in line with the law of market economy. On December 1, 1987, the first land auction in China was held in Shenzhen Hall, in which 44 enterprises took part. The SSEZ Real Estate Company finally offered 5.25 million yuan to acquire the land with an area of 8,588.25 square meters and a 50-year tenure104. The auction finally brought to light the potential capital value of land in a market economy and directly led to the nationwide promotion of the principle that “the right of land use can be transferred by the law.”105 This auction was also the starting point of land reform in SSEZ. Since then, government allocation has been gradually replaced in the transfer of the right of land use by bidding, auction, and listing. Land transfer, coupling with the demand for capital expansion, has promoted the rapid development of Shenzhen in the next thirty years.

2.2.2 Unified Land Conversion Before establishing SSEZ, Bao’an County was mainly an agricultural county, where the majority of its area was collective land. To obtain land and space for development, Shenzhen carried out unified land conversion twice. The first time was when SMPG promulgated the “Temporary Provisions on Rural Urbanization in SSEZ” on June 18, 1992. The villagers were transformed into citizens while the rural collective land was transformed into state-owned land. By doing so, the SSEZ enjoyed a tremendous development in the following ten years. Although there was the Second Line to separate the inside and outside SEZ, it could not stop the rapid development in the outside SEZ as capital tended to flow to lower cost areas. It was precisely that the

102 See Writing Group of Propaganda Department of Shenzhen Municipal Committee. Riddle of Sphinx in Shenzhen. (Shenzhen: Haitian Press, 1991),39-43. 103 Chen Hong. Civil Observation of Major Decisions and Events in Shenzhen 1979-2000. (Wuhan: Changjiang Literature & Art Publishing House, 2006), 64. 104 Ibid., 161-163. 105 ‘Constitution Amendment of People’s Republic of China 1998’. Clause2. 25 existence of Second Line caused differences in the administrative management, land policy, public resources input, etc. between inside and outside areas, resulting in the dual development and the gap growing. Various reasons and requirements, such as the lack of development space inside the SEZ, the disorderly development outside the Second Line, and the need to integrate the land and spaces, have led to the urbanization of the whole Shenzhen city. On October 30, 2003, the SMPG issued the “Notice on Accelerating the Urbanization Process of Bao’an District and Longgang District” (SMPG [2003] No.192). The collective land in the whole Shenzhen city was converted into state-owned land, and 270,000 peasants were all converted into residents with urban household registration. Shenzhen became the only city without rural areas and farmers in China.

Since the late 1990s, many cities in China have been criticized for expropriating rural land for development, critics arguing that the government forcibly deprived peasants of land at low prices and transferred the benefits to a small number of beneficiaries (foreign investors or developers).106 This unified land conversion in Shenzhen was the first and the only time in the country and this practice was different from that of a single project. Although the land ownership had been fully converted to state-owned, the premise was to ensure the original land rights and interests of villagers and village committees, that was, 100 square meters of residential land per household, 100 square meters of land for public buildings per villager, and 200 square meters of land for public facilities per household.107 Moreover, the unified conversion in Shenzhen was unlike the situation in many other cities where peasants lost the land for their lives and could not survive after running out of the compensation. Although the peasants in Shenzhen were peasants in their status, they have long been divorced from agricultural production and turned to work in the industry or service sector. Most of them built houses on their homestead to become rent-collectors and have been living a prosperous life. The conversion did not change their lives greatly but provided them with social security as urban residents such as pension, medical care, education and so on. The unified conversion did not cause social unrest, but it led to many illegal land occupations and construction in disregard of policies and regulations. In a short period, a large number of buildings were built, which did not conform to fire safety standards and were of poor construction quality. Because of the small interval between buildings, these houses were called ‘handshake building’ and ‘kissing building’. (see photo 2.1) However, the government did not take strong measures to prohibit and demolish these villagers’ unauthorized construction, instead, it acquiesced to the existence of these illegal buildings afterward. It was assumed that the government was worried about creating a mass incident and adopted a peaceful approach. Meanwhile, villagers bet on the government not punishing collective offenders and chose to take risks for the great benefits. The unified conversion effectively curbed the spread of disorderly

106 David Harvey. A Brief History of Neoliberalism. (Oxford: Oxford University Press, 2005),146. 107 The first right of land use goes to the villagers directly, and the latter two rights of land use belong to the village committees. For details, see “Interim Measures for Planning and Land Management of Bao’an and Longgang District of Shenzhen City” (SMPG [1993] No.283) and “Urbanization Land Management Measures of Bao’an and Longgang District of Shenzhen City” (SMPG [2004] No.102). 26 construction conducted by villagers and village committees and provided a guarantee for the overall development of the city, which showed the foresight, courage and strength of the SMPG. However, the government was defeated in the competition with villagers in illegal construction, which accelerated the formation of urban villages and expanded their scales as well. Government’s compromise not only increased difficulties in urban renewal at this stage but also made citizens learn how to resist the government.

Diagram 2.1: Location of the Luohu Commercial District

Source: diagram drew based on the Shenzhen map (1982)

Photo 2.1: poor condition of buildings in urban village of Shenzhen

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Source: Photo 1-3 are photos of Xiangdong Wei (向东围), Futian District, provided by Xiaohai, an official of Nanyuan subdistrict office. Photos were taken when they carried out a surprise inspection on the urban village, 10/4/2017. Photo 4-5 are photos of Wangtang (旺塘), Longgang District. Photos were taken by the author in field research, 2/1/2018.

2.2.3 Land Finance Land as a key resource provided space for urban development, while land as a capital source enabled the government to obtain developmental funds. In fact, the rapid urbanization of many cities in China was dependent on land for gathering developmental capital. This was known as “land finance”, which has always been criticized but still intensified. Many blamed the land finance on the financial system reform that was implemented in 1994, arguing that the tax-distribution system has strengthened central finance and weakened local finance. The system put the income of land and real estate, which only accounted for a very low proportion of fiscal revenue at that time, into the local government income and it was even not included in the budget. Since July 1, 2002, when the “Regulations on Grant the Right to Use State- owned Land by Biding, Auction and Listing” were implemented, land and housing prices were pushed up rapidly, which opened up an important financial resource for local governments. Land grant fees have gradually become a pillar of the local fiscal revenue, which, in some cities, even exceeded 50% of the fiscal revenue. However, Zhu Rongji (朱镕基), a former Premier of the State Council, firmly denied that the tax- distribution system was the source of land finance at a symposium with teachers and students of Tsinghua University in 2011. He used the central and local fiscal data of 2010 to argue that attacking the tax-distribution system to hollow out the local finances was ignorant. The national revenue was 83.3 trillion yuan in 2010, in which the local direct revenue took 40.0 trillion, and the tax refund to the local level from central government was 33.0 trillion. He believed that local finance was not short of money

28 and the origin of land finance lay in the housing reform policy.108

No matter what the source of land finance was, that many local governments have been kidnapped by the land finance was a matter of fact. Land prices in auctions were getting higher and higher, which were transferred to the housing prices that were paid by buyers eventually. High housing prices have caused resentment in citizens of some cities, leading to the flight of some enterprises and talents, which further affected urban development. The central government has decided to change this situation. Since the 18th CCP National Congress, land reform policies have been issued frequently. One of the core countermeasures was to make rural non-agricultural land enter the market directly through market-oriented means instead of land expropriation by the local government. However, these reforms will seriously affect local finance and damage the interests of some groups. Although under the leadership of the strong central government, there were always opportunities for local governments to exercise their influences. Therefore, the competition between the central state, the local state and interest groups was extremely fierce and the reform was difficult to promote.

Although the proportion of land finance in Shenzhen was relatively low when comparing to other cities, the development of Shenzhen was, to some extent, an achievement in the land reform. However, after 40 years’ rapid development, the problem of insufficient space highlighted the fact that the land issue has become the bottleneck of Shenzhen’s further development. In February 2012, the Ministry of Land and Resources109 and the Guangdong Provincial Government jointly approved the “Overall Plan of Land Management System Reform in Shenzhen (2012-2020)”, which marked the start of Shenzhen’s second land reform. Shenzhen has entered the stage of stock land development 110 from the incremental land development, with urban renewal and land consolidation 111 as the two major land development modes. However, the development of urban renewal projects was more difficult with a longer period and greater investment. Although there were ups and downs, generally, 1999- 2012 was the period with large numbers and area of land transactions. The supply of residential land decreased year by year accordingly since 2012. (see table 2.1 and figure 2.1) Thus, residential land launched for auction was competed for keenly by developers, resulting in much higher land prices. The cost of time and fund from developers was ultimately reflected in the high housing price in Shenzhen. The figure 2.2 shows that the average selling price of commercial housing in 2017 was 54,584 yuan, which was 7.6 times that of 7,149 yuan in 2005. It is noteworthy that these prices

108 See the video of Zhu Rongji’s Tsinghua speech (2011). http://business.sohu.com/20110526/n308583800.shtml (access on 12/9/2019). 109 The Ministry of Land and Resources was revoked in the institutional reform of the State Council in 2018 and merged into the Ministry of Natural Resources. 110 Stock land development refers to the clearance, integration and secondary development of unused land and land with insufficient, unreasonable and low output within the existing urban land use. 111 Land consolidation refers to the consolidation of scattered land, the land clearance and the pre- development of land through means of withdrawal rights of land use, housing acquisition and demolition, land acquisition, treatment of historical problem of land, and reclamation land. Land consolidation is dominated by the government and mainly provides land for industrial upgrading and large-scale public services facilities. Shenzhen Land Consolidation Bureau was established in 2012. 29 were the average prices of the city. In some areas of Futian District and Nanshan District, such as , Xiangmi Lake, Houhai, Shekou and school district around key schools, the housing prices have exceeded 100,000 yuan per square meter. When Shenzhen was trapped in a dilemma of insufficient development space, high housing prices and the outflow of enterprises and talents, the Guangdong- Hong Kong-Macao Greater Bay Area112 (GBA) was proposed and planned in 2017, which provided Shenzhen an opportunity to break through the bottleneck and mitigate the situation.

Table 2.1: numbers of land transactions of residential land (1987-2017) numbers of land area of land year transactions for residential transactions for land residential land (m2) 2017 2 57300.0 2016 4 239700.0 2015 4 132970.7 2014 1 46646.8 2013 3 132671.2 2012 7 414979.9 2011 11 1283640.1 2010 7 605442.8 2009 9 565363.2 2008 9 958228.7 2007 15 452456.7 2006 20 996007.0 2005 14 709683.9 2004 31 1784606.2 2003 34 2147753.7 2002 26 940069.8 2001 20 1245134.0 2000 11 422921.9 1999 4 323512.1 1998 2 45818.4 1996 2 26981.2 1993 2 37999.0 1992 5 46034.0 1991 12 86038.0

112 The Guangdong-Hong Kong-Macao Greater Bay Area is an urban agglomeration including 11 cities, Hong Kong, Macao, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, , Jiangmen, Huizhou. Its area is 56000 square kilometers with population of 67.74 million in 2016. The GDP of 2017 was nearly US$1.4 trillion. The cities in the GBA conduct in-depth cooperation in economic, cultural and technological fields. Details see Overview of Guangdong-Hong Kong-Macao Bay Area, Research Group of Hong Kong Legislative Council Secretariat, file#FS03/17-18. http://www.legco.gov.hk/research-publications/chinese/1718fs03-overview-of-guangdong-hong-kong- macao-bay-area-20180223-c.pdf (access on 12/9/2018) 30

1990 4 104395.0 1989 2 14778.0 1988 6 51924.0 1987 2 54943.0 Source: https://d.qianzhan.com/ (access on 16/9/2018)

Figure 2.1: area of land transactions of residential land (m2) (1987-2017)

2500000.0

2000000.0

1500000.0

1000000.0

500000.0

0.0 1987 1989 1991 1993 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

area of land transactions for residential land

Notes: line chart based on the number of table 2.1.

Figure 2.2: average sales price of commercial housing in Shenzhen (2005-2017) (yuan/m2)

60000 5442554584

50000

40000 33006 30000 2178823559 201681891318773 20000 15586 1409012889 9111 10000 7149

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

average sales price of commercial housing

Source: bar chart based on the data https://d.qianzhan.com/ (access on 16/9/2018)

2.3 Housing Policies Throughout the economic reform in Shenzhen, apart from the land supply for housing construction, the government has intervened directly in the housing industry by

31 promulgating housing policies and regulations, through which the government has established the commodity nature of housing and pushed it to market operation. Meanwhile, the government threw away the financial burden of housing distribution and gained numerous fiscal revenues through the provision of land and real estate taxes. Since the commodity nature of housing was released, the housing development became a new attraction of a large amount of capital investment and later became a pillar industry, which gave birth to such giant real estate enterprises as Vanke Group, The China Merchants Real Estate, and Wanda Group. Because of the commercialization of housing, housing quality and living environment have been greatly improved, meanwhile, buying houses has become an important means of private consumption and investment, which together had a profound impact on the everyday life of contemporary Chinese.

2.3.1 Welfare Housing System and Housing Problem in Early Shenzhen Before 1978, China’s cities implemented the national housing system of “unified construction, distribution and maintenance”, that was, the government and units (单 位)113 were responsible for raising funds and construction, and workers got welfare houses by allocation for dwelling indefinitely with a very low rent, meanwhile, units were responsible for the housing management and maintenance. As a result, the state and the units bear a great financial burden. In addition, the lack of funds made housing construction very slow and the maintenance very weak, which resulted in people’s per capita living space becoming smaller and the housing quality lower.114 Because of the low rent, getting a flat was not related to one’s income, but to the unit one served, the position, and social relations. Leading cadres could be first assigned a house, normally good and big. Those who could build a relationship with the cadres who were in charge of the housing allocation could also be in the first place assigned a flat. Therefore, people had to exploit some connections to get a good job in a good unit. The housing distribution welfare system was extremely easy to breed corruption and unfairness, which led to great resentment among ordinary people and became a factor in social instability. Moreover, the binding of houses and units led to people’s reluctance to change their jobs easily, and reduced the mobility of talent. Many people worked in the same job in the same unit, while living in the same house in their whole lives, which depressed the initiative and creativity of work and life. As a result, the whole city was dull, depressed and losing its vitality.

The housing problem in Shenzhen’s early stage was more prominent than in other cities. When Shenzhen city was founded in 1979, the population was 314,100,

113 Units (dan wei) refer to the institutions in which people work. According to the index of the National Bureau of Statistics, units mean economic entities that can own assets, incur liabilities, engage in economic activities and trade with other entities in their own names. Units are divided into three categories, government units, public service units and enterprise units. Enterprise units need to obtain legal person qualification through industrial and commercial registration. 114 In the 1970s, urban residential areas were 27-35 square meters per household and 3.5-4 square meters per capita. Kitchens and toilets were shared by several families. The National Housing Census (1985) showed that more than a quarter of the urban residents were in poor housing condition and 1.2 million families without houses. Details see Lv, Junhua, Rowe, Peter G. and Zhang, Jie, ed. Modern Urban Housing in China 1840-2000. (Beijing: Tsinghua University Press, 2002),174. 32 including less than 30,000 urban household registration and about 2,000 temporary residents. The per capita living area was 2.7 square meters, with very poor quality and conditions. The government, setting up a city with such a weak foundation, brought in a large number of people and had to face the major problem of solving their housing demands inevitably. From 1979 to 1987, although Shenzhen built residential buildings at an annual growth rate of 40%, the housing problem has not been alleviated. The number of households without a house even reached 22,000.115 The welfare housing allocation system could not at all satisfy the demand of a rapidly increasing population, thus, the housing reform was imminent.

2.3.2 The First Housing Reform The China Merchants Shekou Industry Park, which was self-financing and self-risk- bearing, was the first institution to attempt the housing reform. The funds to develop the Industrial Park were raised from the loans of banks in Hong Kong, including for building a large number of employees’ family housing and dormitory. Yuan Geng once calculated that “building a flat of 80 square meters costs about 20,000 yuan, excluding the construction fee of community and public facilities, the monthly interest of which is more than 200 yuan. If we adopt the previous low rent policy, 8-10 yuan per month, it is not enough even just for the maintenance of the buildings, not to mention to repay the loan with interest. For this reason, the housing rent in our Industrial Park has increased to 80-120 cents per square meter.”116 Although the housing rent in Shekou Industrial Park was the highest in China at that time, it obviously could not repay the loan including interest. Therefore, the Industrial Park enacted the “Interim Measures for the Management of Employees’ Housing in Shekou Industrial Park,” advocating the housing purchase at a preferential price (quasi-cost) and encouraging the employees to own their private property, which was the first time that public housing was sold to employees in Shenzhen. However, this reform did not receive a positive response from Shekou employees at the beginning, as many people have calculated that renting was still a better deal. In order to carry out the reform, the Industrial Park required cadres to take the lead in buying houses, meanwhile, to encourage the purchase, the Industrial Park offered a discount of 25-30% off on the price of quasi-cost and provided home loans as well (the banks had not yet started the mortgage business at that time).

Following the bold attempt of Shekou Industrial Park, SSEZ promulgated the “Cadres and Staffs Housing Commercialization Trial Measures in Administrative Institutions” in 1985. It could be found easily just from the title that this was a trial implementation in a specific scope. What was truly epoch-making was the “Housing System Reform Plan of SSEZ” read out by Vice Mayor Li Chuanfang in Shenzhen Hall on June 10, 1988, which started the first housing reform in Shenzhen. This reform mainly established the commerciality and sociality of housing, that was, gradually abolishing the housing

115 See Shenzhen Municipal People 's Government Housing System Reform Office & Shenzhen Land and Resources and Real Estate Administration, ed. A complete Record of Housing System Reform in Shenzhen 1988-2005. (Guangzhou: Guangdong Economic Publish House, 2005),4. 116 Yuan Geng’s speech at the work conference of the SEZ on 25/12/1985. China Merchants Group Office and Research Association of China Merchants History, ed & print. Yuan Geng’s Anthology (2012),167. 33 allocation system, pushing housing to the market and realizing the housing commercialization eventually. The starting point was to raise rents and put housing subsidy into wages to encourage individuals to buy existing public housing. The government and units obtained funds through the sale of public housing to speed up the housing construction and improve people’s living condition. On the other hand, buyers got housing from the market. Thus, housing was directly linked to personal income, cutting off the ties between individuals and units, so that housing could gradually realize socialization.

Although this plan was to promote housing to the market, in practice, because these existing public houses were only sold to the employees of the unit, only some of the residents could buy a house. Many residents whose units had no houses to sell were not capable of buying commercial housing at market prices. The government had the responsibility to address the residential needs of these people to maintain social equity and stability. Referring to the experiences of Singapore and Hong Kong 117 , the Shenzhen government launched the “Outline of housing Development in SSEZ” on July 27, 1989, putting forward the housing supply model of “double tracks - triple types - multi-prices” (双轨三类多价制) (see diagram 2.2). This diagram shows that the government and developers were responsible for building houses. The government provided commercial welfare housing to government employees and low-profit commercial housing to low-income workers. Most of the workers had to rely on the commercial market housing built by developers. Meanwhile, a variety of housing prices coexisted in the system.118 This model was a specific embodiment of the dual-track price system which was implemented in 1985. The dual-track price system had been criticized for benefiting individual interest groups and become a “hotbed of economic disorder and corruption”.119 Obviously, the biggest beneficiaries of this model were government employees. But in any case, the dual-track price system was an “intermediate system between a centrally planned and a market system” in China’s gradual reform. 120 Likewise, this model was an intermediate policy between the welfare housing distribution and housing commercialization. Housing reform, combining with the land reform, opened the prelude of Shenzhen’s commercial housing construction, which gave birth to real estate companies with housing development as their main business. Vanke Group, the leading real estate developer nowadays, acquired two parcels of land by auction in Luohu District in 1988 and has since entered the real estate industry (for more Vanke’s details, see chapter 3).

Diagram 2.2: double tracks-triple types-multi-prices

117 Details of Hong Kong’s housing system in different stages refer to Pui Yin Ho. History of Hong Kong’s Urban Planning 1841-2015. (Hong Kong: Chung Hwa Book Co. (H.K.) Ltd, 2016), 184-185, 217-219, 302- 305. 118 See Aipin Chen, ed. Seeking for Progress: Housing System Reform and Practice in Shenzhen. (Beijing: China Social Sciences Press, 2017), 38-39. 119 Clause 25, “Decision on Further Establishing Order, Readjustment and Deepen Reform”. People’s Daily, (17/01/1990), 1. 120 Leong H. Liew. “Gradualism in China’s economic Reform and the Role for a Strong Central State”. Journal of Economic Issues, Vol 29. No. 3 (1995), 883-895. 34

Source: Aipin Chen, ed. Seeking for Progress: Housing System Reform and Practice in Shenzhen. (Beijing: China Social Sciences Press, 2017), 38.

After the introduction of the housing reform, many workers whose units had houses to sell bought the existing public housing, so that the government and units gained funds for new development. However, with the increase of urban population, the number of households without housing was still rising, the cost burden on units was still great, and the living conditions were uneven and unfair. The reason lay in the fact that the housing reform program stipulated that “married couples over 23 years old provided that one side of the couple is a registered resident of Shenzhen have the right to buy or rent a quasi-cost commercial housing”.121 Housing reform was directly linked to household registration. Those who were not registered residents of Shenzhen were not qualified to get a quasi-cost house.

Shenzhen’s workers consisted of three groups. The first one was government employees, accounting for about 20%, who were provided with commercial welfare housing by the government. The second group was enterprise employees, accounting for about 70%. According to the reform, employees were granted housing subsidies and they should obtain housing through two ways, low-profit commercial housing and commercial market housing. But in practice, housing subsidies for employees were inadequate for them to get access to any commercial housing, so that companies had to buy housing and rent to their staffs. However, the low-profit housing was insufficient, and the price of commercial housing had been rising, which burdened enterprises heavily. The third one was workers not belonging to any units, about 10%, mainly small vendors and temporary laborers. Their low wages meant that they could not afford to buy commercial housing, and normally they were not registered residents to buy low-

121 See “The Sale and Lease of Quasi-cost Commercial Housing”, the fifth chapter of “Housing System Reform Plan of Shenzhen Special Economic Zone”. Shenzhen Municipal People 's Government Housing System Reform Office & Shenzhen Land and Resources and Real Estate Administration, ed. A complete Record of Housing System Reform in Shenzhen 1988-2005. (Guangzhou: Guangdong Economic Publish House, 2005),303-304. 35 profit commercial housing. Most of them had to stay in temporary houses or rent peasants’ housing, which was in poor living condition. 122 Moreover, before the promulgation of the “Provisional Regulations on Socialized Housing in SSEZ”123 in 1992, low-profit housing was sold only to enterprises, not directly to individuals. It was evident that the housing reform was only aimed at residents with urban registration and with formal units and jobs. However, Shenzhen is an immigrant city where the temporary population was the main body. From 1988, the proportion of the population who were non-registered population reached nearly 50%, and from 1992, this ratio has almost remained above 70% (see table 2.2). Therefore, in such an immigrant city, the housing problem had not been solved at all. In addition, the real estate sector in Shenzhen had begun to prosper, but according to statistics, two-thirds of the commercial housing was bought by enterprises.124 In other words, the prosperity of the commercial housing market at that time was not due to the individual consumption demand, which was not the true meaning of the real estate market.

Although it could not satisfy the housing demands of the major population and there were various problems mentioned above, this housing reform policy was still a milestone, which had a far-reaching impact on the housing development in Shenzhen and even the housing reform of the whole country. Its greatest merit, first of all, was to establish that housing was a commodity that could be bought, sold, transferred, leased and mortgaged, and to make people accept the concept that buying the property was a form of household consumption. Secondly, through the sale of existing public housing, housing funds were raised to develop new residences, which put the construction of low-profit housing into a reasonable and healthy developmental track. “According to the incomplete statistics of Shenzhen Land Resources and Property Administration Bureau, from 1988 to 2004, the Shenzhen government raised more than 25 billion yuan from the sale of public housing to build new affordable houses of 17.15 million square meters.”125 Thirdly, the commercialization of housing provided a new source for sensitive capital expansion to promote the real estate industry. Finally, Shenzhen had pioneered the exploration of residential finance and accumulated experience for deepening the housing reform in 1998.

Table 2.2: population of Shenzhen (10,000person) (1979-2016) year year-end registered non- ratio of non- permanent population registered registered population population population 1979 31.41 31.26 0.15 0.5

122 See Dong Richen, “The Countermeasures to Solve the Housing Problem in Shenzhen” Special Zone Economy No.9 (1992):30. 123 Housing socialization refers to the individuals’ direct application to the Housing Bureau for purchasing small-profit housing, thereby cutting off the links between employees and enterprises in housing, not only reducing the pressure on enterprises, but also conductive to the flow of talents. 124 Enterprises bought commercial houses in the market and allocated to their employees for buy or rent. See Dong Richen, “Review the Past Seven Years of Housing Reform in Shenzhen”, originally published in The Shenzhen Housing Bureau, ed. Shenzhen Residence. (Beijing: Xinhua Publishing House, 1995). Quoted in A complete Record of Housing System Reform in Shenzhen 1988-2005. (2005),112. 125 A complete Record of Housing System Reform in Shenzhen 1988-2005. (2005),482-483. 36

1980 33.29 32.09 1.20 3.6 1981 36.69 33.39 3.30 9.0 1982 44.95 35.45 9.5 21.1 1983 59.52 40.52 19.00 31.9 1984 74.13 43.52 30.61 41.3 1985 88.15 47.86 40.29 45.7 1986 93.56 51.45 42.11 45.0 1987 105.44 55.60 49.84 47.3 1988 120.14 60.14 60.00 49.9 1989 141.60 64.82 76.78 54.2 1990 167.78 68.65 99.13 59.1 1991 226.76 73.22 153.54 67.7 1992 268.02 80.22 187.80 70.1 1993 335.97 87.69 248.28 73.9 1994 412.71 93.97 318.74 77.2 1995 449.15 99.16 349.99 77.9 1996 482.89 103.38 379.51 78.6 1997 527.75 109.46 418.29 79.3 1998 580.33 114.60 465.73 80.3 1999 632.56 119.85 512.71 81.1 2000 701.24 124.92 576.32 82.2 2001 724.57 132.04 592.53 81.8 2002 746.62 139.45 607.17 81.3 2003 778.27 150.93 627.34 80.6 2004 800.80 165.13 635.67 79.4 2005 827.75 181.93 645.82 78.0 2006 871.10 196.83 674.27 77.4 2007 912.37 212.38 699.99 76.7 2008 954.28 228.07 726.21 76.1 2009 995.01 241.45 753.56 75.7 2010 1037.20 251.03 786.17 75.8 2011 1046.74 267.90 778.85 74.4 2012 1054.74 287.62 767.13 72.7 2013 1062.89 310.47 752.42 70.8 2014 1077.89 332.21 745.68 69.2 2015 1137.87 354.99 782.88 68.8 2016 1190.84 384.52 806.32 67.7 Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2017 (Beijing: China Statistics Press, 2017),57.

2.3.3 Macro-economic Control from 1993 to 1998 Although commercial housing was primarily sold to enterprises at the outset, the housing reform did boost the prosperity of the real estate industry. Especially since

37

Deng Xiaoping’s (邓小平) southern tour126 in early 1992, China’s real estate industry ushered in its first unprecedented prosperity. On November 4 of the same year, the State Council issued the “Notice on Several Questions Concerning the Development of Real Estate Industry,” clearly pointing out that “Real estate industry is a new industry in China and an important part of the tertiary industry. With the compensated-use of land and the promotion of housing commercialization, it will become one of the pillar industries of the national economy”.127 The Notice further stimulated the real estate market. A rapid expansion of the real estate industry occurred in most cities, with a substantial increase in investments, land leasing, and development volume. Speculative businesspeople suddenly found that the real estate industry could, like magic, multiply their assets. As long as they found a way to access land and loans, they could become rich right away. Thus, they immediately set up a real estate company and used all ties to obtain land, loans and building materials. At that time, the hottest place was SEZ. A large amount of money and people rushed to Hainan wildly, and there were thousands of signs of real estate companies on Hainan’s streets. Other coastal SEZs also had similarly sudden and sharp development, and Shenzhen was not an exception. The investment in fixed assets in Shenzhen increased sharply from 9.123 billion yuan in 1991 to 17.823 billion in 1992 in a growing rate of 95.3%, reaching 24.779 billion in a rate of 39% in 1993, among which the real estate investment increased from 2.556 billion yuan in 1991 to 13.046 billion in 1994 by annual growth rates of 180%, 43.7% and 27%, respectively (see figure 2.3).

The central government was alerted to this severe financial situation as over- investment had led to the Consumer Price Index (CPI) reaching 114.7% in 1993 and 124.1% in 1994128 . Zhu Rongji, the Vice Premier of the State Council, delivered a speech entitled “Preventing Inflation should start from the very beginning”129 on April 1, 1993, which signaled that the central government would take measures to control inflation. On June 24, the Central Committee issued the “Opinions on the Current Economic Situation and on Strengthening Macro-control” (Central Committee [1993] No.6) (known as ‘State 16’), which adopted 16 measures to start macro-control formally with the focus on rectifying financial order and controlling inflation as the primary task. On July 2, 1993, Zhu was appointed as the governor of the People’s Bank of China to implement the ‘State 16’ better. At the National Conference of Financial Work on July 7, 1993, he ordered the governor of each bank to call in 50% of the illegal loans and put forward recovery plans for the remaining 50% before August

126 ’s southern tour means Deng Xiaoping’s visit to Wuchang, Shenzhen, Zhuhai and Shanghai from 18th January to 21st February 1992, during which he delivered a series of important talks, collectively referred to as ‘Southern Talks’. The Talks focused on the doubts and vacillations that many people had about the reform at that time, and reaffirmed the necessity and importance of deepening the reform and accelerating the development. The Southern Tour played a key role in promoting China’s economic reform and social stability in the 1990s. 127 See the “Notice on Several Questions Concerning the Development of Real Estate Industry” (State[1992] No.61). http://www.gov.cn/zhengce/content/2010-12/19/content_4913.htm (access on 16/9/2018). 128 CPI data from Qian Zhan Data Base https://d.qianzhan.com/ (access on 25/9/2018). 129 Rongji Zhu. Zhu Rongji Speeches Vol1. (Beijing: People’s Publishing House, 2011), 277. 38

15 of that year.130 The ‘State 16’ has effectively curbed the development of the real estate industry by strictly controlling the entry of bank loans into the real estate development, levying a high regulation tax on investments, strictly examining new projects and other economic measures to control investment in construction. Due to the lag effect of inflation, although the overall economic development had slowed down, the national retail index still rose by 27% in 1994. Zhu pointed out that excessive growth in fixed assets investment and large-scale infrastructure were the fundamental causes of the inflation, so the central government continued to implement strict measures on controlling land grants, no longer approving high-end real estate projects.131

Although unlike the crash in Hainan Province, the growth in the real estate industry in Shenzhen slowed down during the macro-control. In 1995, the investment dropped to the level under that in 1994. (see figure 2.3) This macro-control produced the desired effect, and its wide-ranging impact lasted for a long period. From 1993 to the first half of 1998, China’s real estate development experienced a slowdown to a downturn with both sales volume and prices falling. However, the situation in Shenzhen was slightly different from that in the whole country. As can be seen from the chart, it slightly fell behind in 1995 then began to rise in 1996. Because the real estate development in Shenzhen was ahead of other cities, there was a slowdown in price rises due to the automatic adjustment of the market itself in the half year before the national control policy came out, while the adjustment in other cities lagged behind the national policy for more than half a year. Therefore, Shenzhen’s adjustment ended before other cities. In addition, in the second half of 1994, the rate of individual house purchasing in Shenzhen exceeded 60%, and the individual purchasing power exceeded that of enterprises, which marked the maturity of the real estate market in Shenzhen. Furthermore, the Shenzhen government issued the “Several Provisions on Promoting the Real Estate Market in Shenzhen” in 1995, which put forward 11 measures to help the real estate market in Shenzhen to quickly re-enter the path of accelerated development from the downturn.132 The stable response of Shenzhen to the state’s regulation was due to the housing reform since 1988. The Shenzhen government instilled the concept of the housing commerciallization into its residents through the housing reform and cultivated the commercial housing market.

Figure 2.3: investment in fixed assets and investment in real estate development (ten thousand yuan) (1990-1997)

130 See Zhu Rongji’s speech “Ground Rules on Financial Work” in the National Conference on Financial Work hold on 5th-7th July 1993. Rongji Zhu. Zhu Rongji Speeches Vol1. (Beijing: People’s Publishing House, 2011),307-316. 131 See Zhu Rongji’s concluding speech at the central economic work conference in 1994. Rongji Zhu. Zhu Rongji Speeches Vol2. (Beijing: People’s Publishing House, 2011),65-79. 132 See Shi Wang, Chuan Miu, Road and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006),142-144. 39

4500000 3930657 4000000 3275270 3500000 2819413 2758243 3000000 2477875 2500000 1782322 2000000 1304600 1248251 1366545 1500000 912324 1027700 1030368 1000000 623380 714900 255600 500000 112000 0 1990 1991 1992 1993 1994 1995 1996 1997

investment in fixed assets (ten thousand yuan) investment in real estate (ten thousand yuan)

Notes: line chart based on Shenzhen Statistical Yearbook 2015 (Beijing: China Statistics Press, 2015),171.

The sudden popularity of Hainan, Beihai and other coastal places was the inevitable result of the uneven geographic development because the government policies had encouraged the demands of capital reproduction. When the market adjustment ability was poor, the situation was gradually out of control. In such cases, the government intervened and adjusted through issuing new policies. This was a typical market economy with Chinese characteristics, that was, an incomplete market economy under state intervention when the state controlled the process and direction of economic development through strong administrative forces. At the same time, even if a nation- wide macro-control prevailed, local cities still had a certain operating space. The central government issued a programmatic document, then the local government detailed implementation rules according to their specific circumstances, which not only had the rationale of dealing with the actual local situation but also created the competing space between the local government and the central government. In order to maintain local finance, local governments tended to introduce some compromise regulation, which was why the land finance has snowballed and the housing prices have become higher under more regulating.

2.3.4 Cessation of the Welfare Housing System Since the regulation in 1993, developers without land reserves were unable to obtain lands, while those having land found it difficult to gain loans and approval for construction. Therefore, many developers had to choose to sell their lands at a much lower price. By the outbreak of the Asian financial crisis in 1997, China’s import and export and foreign investment were affected, resulting in negative growth. In order to maintain the economic growth, the central government formulated policies to stimulate domestic demand. At the critical juncture when the struggling companies were about to surrender, the government introduced new policies on finance and housing reform. On May 9, 1998, the Bank of China promulgated the “Regulations on the Management of Personal Home Loans”, which were enacted to support urban residents in

40 purchasing their ordinary housing. Residents who were eligible for loans could obtain loans for up to 20 years and up to 70% of housing purchases. Then on July 3, the State Council issued the “Notice on Further Deepening the Reform of Urban Housing System and Accelerating Housing Construction” (State [1998] No.23), which contained 20 clauses. Among them, what had an earthquake effect was “stopping the distribution of housing”, 133 which completely ended the welfare housing system that had been implemented for 50 years since the founding of the PRC. This clause terminated the welfare housing distribution for government employees and also terminated companies’ buying houses for leasing or distribution to their staff. Although the Notice proposed to stop the welfare distribution from the second half of 1998, it also agreed that the local government could determine the specific implementation time and steps in accordance with the actual local situation. During the period from the issue of the Central Notices to the implementation of specific measures in various localities, companies and residents in cities throughout China felt the earthshaking power of this notification. All government departments and companies that had enough funds were rushing out to buy housing for their employees who still did not own a house. Effective demand broke out in the short term, and real estate development exploded. The over- supply of housing in the past five years was sold out quickly. Those developers who had land reserves tried every means to get the projects started. When the building just started piling, the presale houses were sold out already. As the residents wanted to catch the “last bus” (末班车)134 for welfare housing, their daily lives were stirred up. According to the housing distribution system, houses were generally allocated to married employees. Thus, many lovers got married immediately, and some singles wanted to find someone to marry through a blind date, which triggered a marriage boom. There was regulation in some cities that unmarried employees over the age of 30 could also enjoy the welfare housing. Thus, some couples who had already been allocated a flat were willing to divorce just to get one more house. It was not hard to imagine that such a marriage or divorce for the sake of a house would certainly cause some contradictions and problems, which might further lead to social problems.

Shenzhen’s response to the Central Notice 1998 was not so massive as that of other cities, because housing reform in Shenzhen started earlier than others. Shenzhen’s housing reform plan in 1988 had proposed the abolition of housing allocation, and a gradual implementation year by year. The personal house purchase rate was much higher than that in other cities. In response to the Central Notices and to meet the needs of deepening housing reform and accelerating the housing construction in Shenzhen during this period, the Shenzhen government promulgated “Several Provisions on Housing System Reform of Shenzhen Municipal Agencies and Institutions” on October 20, 1999, which were implemented from January 1, 2000. This regulation was mainly to transfer the housing prices from quasi-cost housing to low- profit commercial housing, as well as to solve the constraints on property rights. After

133 See Clause 2 in the ‘Notice on Further Deepening the Reform of Urban Housing System and Accelerating Housing Construction’ (State [1998] No.23). http://www.bjjs.gov.cn/bjjs/fwgl/zfgg/zfgg/350118/index.shtml (access on 12/9/2018) 134 The ‘last bus’ (mo ban che) metaphor meaning the last chance. 41 being granted full property rights, affordable housing became tradable in the real estate market, which accelerated housing commercialization and socialization. However, this regulation still stipulated that only couples who both had Shenzhen’s household registration were eligible to buy an affordable house, which only solved the housing problem of a small proportion of residents who worked in formal units and with Shenzhen household registration. Because of insufficient housing security, a large number of residents without Shenzhen registration rented peasants’ houses. The abundant rental income gave birth to a group of villagers who were criticized by the public for living a life of idleness and luxury on rent. At the same time, these villagers were willing to take the illegal risk to build higher and bigger housing, accelerating the formation of urban villages and aggravating hidden dangers and poor hygienic conditions.

2.3.5 Development of Affordable Housing in Shenzhen A close reading of the State Notice 1998 would find another important clause, that was “to establish and improve the housing supply system based on affordable housing and to implement different housing supply policies for different income families. The lowest- income families rent low-rent housing provided by government or units; the low to middle-income families purchase affordable housing; those high-income families purchase and lease commercial housing at market prices”.135 However, it did not draw any attention of local governments. The Notice 1998 only brought real estate industry back to life, once again into the track of high-speed development, while the establishment of the social security housing system was almost ignored.

Although Shenzhen launched the first batch of low-profit houses for sale to households without housing in December 1990, there were only 45,501 low-profit houses built from 1988 to 2002,136 and still, only those holding household registration were eligible to apply for the houses. Thus, the demand of most people was not met at all. On June 6, 2003, the SMPG promulgated the “Implementation Plan for the Reform of Housing Distribution Monetization in Shenzhen Municipal Agencies and Institutions” (SMPG [2003] No.104), announcing the complete cessation of the construction and distribution of low-profit housing in government agencies and institutions and gradually “establishing and improving a social housing security system focusing on low income families”, 137 whose annual family income was less than 60,000 yuan. 138 The Shenzhen government had been trying to build a virtuous circle of the social security housing system, but the speed of housing construction would never keep pace with the growth of the urban population. Morover, a large number of temporary residents were not included in the registration system, escaping from effective management.

135 See Clause 7 in the ‘Notice on Further Deepening the Reform of Urban Housing System and Accelerating Housing Construction’ (State [1998] No.23). http://www.bjjs.gov.cn/bjjs/fwgl/zfgg/zfgg/350118/index.shtml (access on 12/9/2018) 136 A complete Record of Housing System Reform in Shenzhen 1988-2005. (2005),416. 137 Clause 8 of the the “Implementation Plan for the Reform of Housing Distribution Monetization in Shenzhen Municipal Agencies and Institutions” (SMPG [2003] No.104). A complete Record of Housing System Reform in Shenzhen 1988-2005. (2005),565. 138 Ibid.,536. 42

Thus, their housing problems were inevitably unable to be taken into account.

Most Chinese people believe houses are the root of life, and without their own houses it is difficult to make them have a sense of belonging, which makes the movement of population full of opportunism and randomness. The labor force, just like capital, tends to flow to those places where the benefits are the greatest. People take personal income, living conditions and employment opportunities as the criteria for evaluating the benefits. Housing is an important factor in living standards and family life. If the housing problem cannot be solved, the human resource structure of Shenzhen, which is the foundation for urban development, will be affected in the long-term.

2.3.6 Alternative Regulation and Relaxation in Policies In the development of commercial housing, upon the cessation of the welfare housing system and various supports from the banks, the real estate industry increased by leaps and bounds. Moreover, the price restriction on commercial housing was abolished in 1998, which meant that developers could set prices for their housing products, henceforth, housing prices were different because of location, developer’s brand, building and environmental quality, etc., but rising all the way. Two important events followed in 2001, that was the successful bid for the Beijing Olympic Games on July 13 and China’s entry into WTO on December 11, which were very encouraging to economic development. Since July 2002, the prices of land and housing rose sharply because of the implementation of the “Regulation on Granting the Right to Use State- owned Land by Bidding, Auction and Listing.” Given the overheating of real estate and the rapid rise of housing prices, the People’s Bank of China issued the “Notice on Further Strengthening the Management of Real Estate Credit Business” in June 2003 to restrain the overheating of real estate by adjusting the personal housing loan policy of commercial banks. However, in August, the Central Committee pointed out that the real estate industry has become a pillar industry of the national economy. To promote the sustained and healthy development of the market, it is necessary to gradually realize the purchase or rental of ordinary commercial housing by most families by adjusting the housing supply structure, meanwhile, to increase credit support for eligible real estate companies.139 There was an obvious contradiction between these two notices issued two months apart, reflecting the government’s ambivalence of worrying about potential social problems caused by overheating of real estate and excessive housing prices on one hand, and hoping the real estate industry driving economic growth continually on the other hand. Land finance began to kidnap government finance at that time. It was this ambivalence that led the development of real estate to a repeated process of overheating, adjustment, unbind, overheating again and re-adjustment. Each adjustment had different priorities, such as tightening land supply and credit in 2004, adjusting supply and demand in 2005, and adjusting the housing structure in 2006. Despite the outbreak of the global financial crisis in 2008,

139 See Clause 1,3,14 in the “Notice on Promoting the Sustainable and Healthy Development of the Real Estate Market” (State [2003] No.18). http://www.gov.cn/zhengce/content/2008-03/28/content_4797.htm (access on 12/9/2018). 43 the Beijing Olympics, followed by monetary easing and 4 trillion from central government, allowed the property market to continue rising after a slight slowdown, then came the year of 2010, known as a policy year. Confronted with the runaway housing prices, the central government and various ministries and commissions issued 14 important regulatory measures 140 and adjusted the interest rates of financial institutions nine times141 in 2010. However, regardless of how the central and local governments regulated and controlled, real estate in first-tier cities like Shenzhen has been in a flourishing trend with housing price rising all the way. In 2016, after Suzhou took the lead in introducing restrictions on purchases, many big cities also introduced their measures. Shenzhen issued strict restrictions on purchases and loans 142 on October 4, 2016, and restrictions on prices of commercial housing and apartments143 on January 19, 2017 to further control housing prices. The effect of the restrictions on purchase, loans and prices really controlled the housing prices to a certain extent, and the turnover volume also fell.

However, the more regulation, the more people felt the scarcity of land and housing. Especially in Shenzhen, a city with insufficient space, both the construction land and the annual salable volume were decreasing year by year. In fact, these measures were

140 These policies and measures mainly included controlling land supply, real estate development and home loans. For example, the “Notice of the Ministry of Land and Resources on Improving the Application and Implementation of Urban Construction Land” on January 21, 2010 stipulated that in the residential land use, the proportion for affordable housing and small and medium-size commercial housing could not be less than 70%; the “Notice on Strengthening the Supply and Supervision of Real Estate Land Use” on March 10, 2010 stipulated that developers pay at least 20% for the auction margin, upon the successful bidding, pay 50% of the land price in one month and the balance within one year; the “Notice on Further Strengthening the Regulation and Control of Land Use and Construction of Real Estate” on September 27, 2010 stipulated that if the annual construction tasks of affordable housing and small and medium-size commercial housing were not fulfilled, urban land could not be supplied to projects of large and high-grade housing; the development of low-density and large-scale housing projects must be strictly restricted; the floor area ratio (FAR) of residential land must be more than 1.0; real estate companies could not lay the land aside for more than one year after obtaining the right of land use. The main provisions on control of purchase included the “Notice on Promoting the Stable and Healthy Development of the Real Estate Market” on January 10, 2010 stipulated that the down payment of the second home loan could not be less than 40%; the “Notice on Firmly Curbing the Rapid Rise of Housing Prices on Some Cities” on April 17, 2010 stipulated that the down payment for the first house with area above 90 square meters could not be less than 30%, for the second house 50%, and the mortgage for the third/and above home was suspended; the “Regulations on Further Regulating the Administration of Housing Purchase for Overseas Institutions and Individuals” on November 15, 2010 stipulated that overseas individuals could only buy one house for their own use, and overseas institutions could only by non-residential property for their offices in the cities where they were registered. 141 In 2010, The People’s Bank of China raised the RMB reserve requirement ratio of deposit financial institutions six times, from 15.5% to 18.5%, and raised the benchmark one-year deposit and loan interest rate three times, 0.25% each. 142 On October 4, 2016, the Shenzhen Planning and Land Resources Commission and other departments jointly issued “Several Measures to Further Promote the Stable and Healthy Development of the Real Estate Market in Shenzhen”. As for the Shenzhen registered households (including some of the family members are registered residents), the policy of restricting the purchase of the second house, that is the down payment for the first house is 30% and 70% for the second one, and the adult single (registered resident and including divorced single) can only buy one house, and the time span of holding social insurance which is the purchase qualification for the non-registered households has changed from 3 years to 5 years, and the second house also requires 70% down payment. http://www.szpl.gov.cn/xxgk/gggs/201610/t20161004_450020.html (access on 13/9/2018) 143 On January 19, 2017, the Shenzhen Planning and Land Resources Commission promulgated the “Rules for the Management of Pre-paid Prices of Commercial Housing and Commercial Department”, stipulating that the prices of commercial housing and commercial department could not be higher than that of similar products in the surrounding area, and could not use decoration to raise the price in a disguised form. http://www.szpl.gov.cn/xxgk/gggs/201701/t20170119_450035.html (access on 13/9/2018). 44 like squeezing demand into a bag, and once the rope was loosened, it was not difficult to imagine how the rebound effect would be, just like the previous adjustments often followed by retaliatory increases. In the face of these restrictions, developers and buyers had a variety of strategies to deal with and circumvent the policies to achieve the best results for themselves, which is discussed in the following chapters. Rigid demand cannot be reduced by various control measures. Only when the supply is sufficient, people do not have to worry about lack of housing or high housing prices. Just like rice in a supermarket, when there is plenty of it, people buy it on demand. When there is a shortage expectation, people panic and scramble for it. Supermarkets may take the opportunity to raise the price, even some people may hoard to sell for a higher price. Therefore, the main focus of dealing with high housing prices should be on the supply side, that is, to provide adequate and affordable housing. When the vast majority of the population can afford to buy or rent a house, the houses are no longer snapped up because of scarcity and housing prices will not keep rising. The stability and balance of the market also can make the flow of capital more rational to avoid overheating in real estate development. Lessons, such as excessive housing prices, talent and businesses escaping, have made the Shenzhen government realize the importance of affordable housing. On June 5, 2018, Shenzhen Housing and Construction Committee released the “Opinions on Deepening the Housing System Reform and Accelerating the Establishment of Multi-sources Supply and Security System through Rent and Purchase”.144 (details see chapter 3). This document was considered to mark the beginning of the second housing reform in Shenzhen.

2.3.7 Summary To sum up, housing development in Shenzhen has gone through every stage of traditional welfare housing distribution and housing reform of commercialization and socialization. The real estate industry in Shenzhen has experienced ups and downs due to the endless national and local policies, but the overall development is flourishing with housing prices increasing all the way. Comparatively, the development of affordable housing is rather slow. In this process, the government played a leading role. Through various policies, the government controlled and adjusted the real estate development process, product structure, sales price, financing and loans, etc., which could be effective promptly in a certain period. But in the long run, the close relationship between government finance and real estate industry, the self-adjusting function of market economy, the various countermeasures created by developers based on their nature of profit-seeking, and the choices and ways of buyers, all worked together on housing development in Shenzhen, diluting the effectiveness of government’s mandatory policies. Meanwhile, the government had to adjust constantly to balance the interests of developers, the needs of residents, and social benefits. Although the high housing prices in Shenzhen have caused many complaints from the public, objectively speaking, if the housing reform did not push the housing to the market, the housing conditions and living environment of Shenzhen would not have been improved

144 See http://www.szjs.gov.cn/csml/bgs/xxgk/tzgg_1/201806/t20180605_12082438.htm?winzoom=1 (access on 5/10/2018). 45 at all; the urban development would be difficult; much capital and talent would not have been attracted; not to mention joining the ranks of the first-tier cities. The government’s policies were inevitably imperfect, even wrong in some aspects, but in the specific circumstances at that time, the merits always overweighed the demerits. The decision of the government to concentrate on the affordable housing development in the second housing reform was justified. Guaranteeing social security is the most fundamental task of the government, and it is also the most effective and lasting method for the government to regulate the real estate market.

2.4 Urban Master Planning and Management Urban planning is an important means to express the strong will of the government in urban construction and development. Urban master planning is responsible for solving urban economic and social development goals, determining the city’s positioning, scale and construction standards, arranging the scales and spatial layout of various types of urban land-use, specifying important projects, laying out urban circulation and transportation system, formulating planning indicators, implementation steps and measures. 145 Urban master planning is led by the municipal government and conducted by a state-owned urban planning institute to ensure that the planning can reflect the government’s strategy and satisfy the interests of urban development. As a SEZ, Shenzhen’s master planning must be examined and approved by Guangdong Provincial People’s Government and submitted to the State Council for approval before it becomes a statutory document. 146 Shenzhen has organized the compilation or revision of master planning and overall developmental strategies many times in the past 40 years. However, only the master planning of the years 1986, 1996 and 2006 have become statutory documents. The “Shenzhen Master Planning 2016-2035” which is under compilation at present will be the fourth edition of the statutory master planning. By reviewing urban master planning and its compilation background, we can understand the social and economic development strategy and spatial developmental direction at different stages, and how the government solved the contradiction between economic development and the needs of people’s livelihood and balanced economic and social benefits. In keeping with the three editions of statutory planning, Shenzhen master planning can be unscrambled in three stages.

2.4.1 Stage one Shenzhen city always proudly calls itself a city built according to urban planning. Since the establishment of the SSEZ in 1980, the SMPG rapidly carried out the compilation of urban planning. In May 1980, Shenzhen Municipal Construction & Planning Commission was set up with Zhang Xunfu (张勋甫), the Secretary of SMPC, as the director, and Jia Hua (贾华), the mayor, as the deputy director. Specialists and

145 See clause 21-32 of “Methods for Compiling Urban Planning”, Ministry of Construction of the People’s Republic of China, No146, (2005). http://www.shgtj.gov.cn/zcfg/ghzd/200812/t20081224_168590.html (access on 13/9/2018). 146 The “Notice to Designate the Approval of Shenzhen Urban Master Planning by the State Council”, State [1995] No.86 (1995). http://www.gov.cn/zhengce/content/2010-11/15/content_5927.htm (access on 13/9/2018). 46 designers from all over the country (including Hong Kong) were called together to form a planning and design team to compile the master planning. In June of the same year, under the presiding of the newly appointed Secretary, Wu Nansheng, the first master planning of SSEZ (see photo 2.2) was worked out. In this planning, Shenzhen was designated as a medium-sized city with industry as the main kind of development. The population was planned to reach 500,000 with a city area of 50 square kilometers by 1990. Bagualing Industrial Zone, Shangbu Industrial Zone, Qingshuihe Storage Zone and several living areas were delineated as well.147 This planning proved to be an important guiding document for the start-up of Shenzhen urban development, in which all the planned industrial zones and residential areas were implemented by steps.148

Shenzhen was upgraded to a sub-provincial city in August 1981, thus, SMPC decided to draw up a new developmental outline to match it. “More than one hundred experts from the country were gathered to formulate the “Outline of Shenzhen’s Social and Economic Development”. After repeated studies and revisions, hundreds of experts and scholars from mainland big cities and Hong Kong were invited to review and make comments. 149 The Outline was submitted to Guangdong Province and the State Council for examination and approval in December 1982. As the basis of urban development, this Outline was still based on the development of modern industry and with a planned population of one million by 2000. For the first time, it proposed the spatial layout of “clusters in a belt shape”150(带状组团结构), which divided the SSEZ into three districts, the East, the Middle and the West, with total 18 functional clusters. In 1983, Liang Xiang151 (梁湘) paid a visit to Singapore with his team, which had a far- reaching impact on the overall planning of Shenzhen. As a world-famous garden city, Singapore’s beautiful landscape and environment impressed the visiting team, which made the Shenzhen officers realize the importance of shaping the urban landscape

147 Ling Huang, “Study on the Overall Planning and Development Strategy of Shenzhen (part one)”, Party History Research Office of Guangdong Provincial Party Committee, Red Wide Angle, Vol3 (2016): 35-36. 148 Shenzhen Industrial Development Corporation was established in September 1982 to develop Shangbu Industrial Zone and Bagualing Industrial Zone. By the first half of 1984, more than 1.3 million square meters of land had ben developed in only one year and nine months. See Wu, Songying. The Hardships and Splendor of Shenzhen (Guangzhou: Guangdong People’s Publishing House, 2015),87. 149 Liang Xiang, “The Establishment and Development of Shenzhen Special Economic Zone” (speech at Shenzhen Economic Development Seminar on 4th June 1984). Shenzhen Special Economic Zone Yearbook (1985). (Shenzhen: Shenzhen Yearbook Press, 1985), 56. 150 Shenzhen’s spatial structure, “clusters in belt shape” is a combination of multi-core cluster planning structure and belt city theory. The multi-core cluster structure was prevalent in European and American cities in the 1960s-1970s. the urban layout was relatively decentralized and consisted of several relatively independent and interdependent groups, which were connected by main traffic lines. A belt city is usually limited by physiographic conditions and forms the urban structure with the main circulation lines in a belt shape land-use. Main urban functions are arranged along coast, river or mountain and are linked by rails or roads. The idea of a systematic belt city was first proposed by a Spanish engineer Arturo Soria Y Mata in 1882. He believed that the rail transport system was the most economical, convenient and rapid. The city should be built along the rail or road to link towns and form a city network. 151 Liang Xiang (6/11/1919~13/12/1998) was the third Secretary of the SMPC, serving from March 1981 to May 1986, when was the most difficult and fastest period of economic reform and urban construction in Shenzhen. He organized the first statutory urban master plan. He took the lead in carrying out major reform measures such as public bidding system, price reform, wage reform, labor contract system, etc. He attached importance to the development of education and science and technology. Eight major cultural buildings were arranged and Shenzhen University was built in his serving period. He also organized the planning of Shenzhen Science and Technology Industrial Park and laid out the high-tech industry in Shenzhen. 47 and environmental protection for the city’s image. After the visit, some adjustments, such as widening road greening and enlarging greenbelts between clusters, were made in Shenzhen master planning (see photo 2.3).

By the end of 1984, the Shenzhen Municipal Planning Bureau and the China Academy of Urban Planning & Design (CAUPD) began to work on a new round of master planning. “Shenzhen Special Economic Zone Master Planning (1986-2000)” (see photo 2.4) was achieved by the end of 1985, which was the first statutory master plan of Shenzhen with a milestone significance. The urban spatial structure (see photo 2.5) and transportation network within SSEZ were formed in this edition, while major transportation facilities, such as Huangtian (黄田) airport (now named Bao’an airport), Yantian Port, and important projects, such as the CBD area and eight major cultural buildings, like museum, library, theatre and stadium, were identified and reserved land- use. Upon the State Council’s approval of the 1986 plan, the Shenzhen Consulting Center of CAUPD was commissioned immediately to study and formulate the “Shenzhen Urban Developmental Strategy”, which was completed in 1990. In this Strategy, the goal of developing Shenzhen into an international metropolis was put forward for the first time and the population forecast for the year 2000 was adjusted to 3 million.

In the first ten years from 1980 to 1990, the Shenzhen master plan was adjusted most frequently. Even so, the planning still lagged behind the rapid pace of development and construction. The planning, design and construction of a project were always carried out simultaneously (known as ‘san bian project’ 三边工程) in the early stage of Shenzhen. The cause of this characteristic of synchronization was catering to capital requirements at a special period. Relevant clues could be found in the planning process and achieved documents in the first ten years. China’s economic reform coincided with the neo-liberal turn led by the Thatcher regime in Britain and the Reagan regime in the United States. After nearly one hundred years of industrialization of Western countries, capitalists needed to find a way out for capital reproduction when their capital accumulation reached a certain level. China’s low-cost land and cheap labors were what capital pursued exactly. In the early stage of Shenzhen’s development, the State did not provide funds, but only supporting policies. “The economic development of SSEZ relied mainly on the utilization of foreign capital, and products were mainly for export.”152 Therefore, this was a period in which the city was eager for capital and was inevitably open to meet the demand of capitalists. Wu Nansheng decided to develop Luohu District first, even at the cost of removing two hills to fill the low-lying areas just because Luohu connected the Shenzhen-Hong Kong entry port, in order to give foreign investors a good impression.

Photo 2.2: the first master planning of SSEZ (1980)

152 Liang Xiang, “The Establishment and Development of Shenzhen Special Economic Zone” (speech at Shenzhen Economic Development Seminar on June 4, 1984). Shenzhen Special Economic Zone Yearbook (1985). (Hong Kong: Economic Information & Agency, 1985), 53. 48

Source: exhibit at . Photo taken from field research in the Museum, 3/12/2017.

Photo 2.3: master planning of SSEZ (1984)

Source: Shenzhen Special Economic Zone Yearbook 1985. (1985),10.

Photo 2.4: Shenzhen Special Economic Zone Master Planning (1986-2000)

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Source: Shenzhen Special Economic Zone Yearbook 1986. (1986), 8.

Photo 2.5: Urban spatial structure, “clusters in a belt shape” of Planning 1986

Source: speech delivered by Chen Yixin, deputy chief planner of Shenzhen Planning and Land Resources Commission, at the 7th Annual meeting of the 3rd Women Planners Committee of the China Planning Association. http://www.sohu.com/a/213324760_611316 (access on 19/9/2018).

In the 1980 planning (photo 2.2), there appeared some unconventional contents. There were only four types of land-use: industry and warehouse; residence; tourism; and farmland, mountain and forest. The residence areas were arranged around industrial areas, which seemed like the subsidiary construction of industry. It could be inferred that the planning was based entirely on the needs of industrial development and its main purpose was to determine the locations of several industrial zones for immediate construction. There were similar phenomena in the planning and construction of the relatively independent area, Shekou Industry Park. The common feature of the 1980 and 1981 planning of Shekou Industry Park (see photo 2.6, 2.7, 2.8) was that there were only three types of land-use: port, industry and residence (including villas and staff dormitories). In reviewing these early plans from today’s perspective, many shortcomings could be found undoubtedly. But when evaluated against the background of the time, they were respectively in line with the needs of SSEZ in its infancy and the original idea of establishing Shekou Industry Park by the Hong Kong China Merchants. Comparing the 1981 planning of Shekou and the 1985 survey map

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(see photo 2.9), it could be found that the actual construction went beyond the scope of the planning, and many public buildings such as stores, hotels and tourist facilities were added, which indicated that the actual development speed of Shekou was much faster than the original planning expectation. Yuan Geng admitted that when they started to develop Shekou, they had no more plans but to open a shipbreaking steel mill, a paint factory, and a container factory to meet the needs of Hong Kong China Merchants. Unexpectedly, the situation changed in the past three years, and their original ideas fell far behind the constant developing, which forced them to keep moving forward.153 The incessant progress was to try meeting the demand of capital expansion. Indeed, to attract and retain capital, they made the greatest commitment to capitalists in project construction. Taking the construction of Shekou oil terminal as an example, the Industry Park wanted to sign the oil depot contract with the Float Glass Factory. In the internal meeting, the general manager of the Industry Park demanded a military order that the project must be finished on time, and pointed out in particular that it must be put into operation before May 30, 1987. Otherwise it might result in a daily fine of 25,000 USD, and seriously damage the reputation of the Industry Park.154 To fulfill this promise, they worked day and night to complete the project and made the factory owner very satisfied. The capital was kept in the Industry Park, and later the factory developed into one of the most successful factories.

Photo 2.6: G.M.S.M. Shekou Industrial Zone General Layout (1980)

Source: Tu Qiao. Yuan Geng Biography: The Reform Scene 1978-1984 (Beijing: Writers Publishing

153 Quoted from Yuan Geng’s speech at the forum of responsible comrades of ports at 21st August 1982, China Merchants Group Office and Research Association of China Merchants History, ed & print. Yuan Geng’s Anthology (2012),58. 154 “Summary of the special meeting on ensuring the completion and operation of the oil depot and oil terminal of the First Bay” (13/09/1986), General manager office of Shekou Industrial Park, ed. Compilation of Documentation for the China Merchants Shekou Industrial Park Vol6 (1988),129. 51

House, 2008).

Photo 2.7: Land use plan for Shekou Industrial Park before 1985

Source: China Merchants Archives, file No. A15.

Photo 2.8: diagram of Land use plan for Shekou Industrial Park before 1985

Note: diagram drew according to photo 2.7 for better understanding

Photo 2.9: survey map of existing land use of Shekou Industrial Park (1985)

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Source: China Merchants Archives, file No. A161.

The Master Planning of Shenzhen, which was found in the Shenzhen Yearbook 1985 (photo 2.3), showed considerable changes. New types of land-use were added, such as administrative and commercial areas, university and scientific research institutions, and public green spaces. It was presumed that this planning was the revised version after Liang Xiang’s visit to Singapore. At that moment, the influx of capital, in addition to requiring production spaces, also brought about the needs of living quality and urban environment by foreign investors. This planning reflected the great efforts made by the local government to create a better urban environment to attract more people and capital. When coming to the 1986 statutory version, the master planning had shown the integrity of a city. But if looking at the proportion of land-use, residential land-use only occupied 18.2%, which was below the standard.155 It could be inferred that the attention of both capital and the government were in industrial production, and did not consider the housing development seriously due to the welfare housing policy at that time. Before the commercialization of housing, the housing industry did not gain any attention from capital.

The reasons for planning and adjustment were closely related to the leaders of the municipal government, especially the Secretary of SMPC. The SEZ was a new thing

155 According to the Clause 4.3.1, “Classification of Urban Land and the Standard of Planning & Construction Land” (GBJ137-90), the proportion of residential land is 20-32%. 53 for which there were no precedents in the history of China. As leaders in early Shenzhen, Wu Nansheng (吴南生) (term 1980.6-1981.3), Liang Xiang (梁湘) (term 1981.3-1986.5) and Li Hao (李灏) (term 1986.5-1993.4) had no experiences in urban construction and economic development. They relied on their courage and judgment. The timeframe for conducting or adjusting the planning was very short in each time, which could prove objectively that these plans did not carry out in-depth research and future prediction, and also showed that capital was very eager to enter the new market. There was not much time left for leaders to think over, and they had to only try in practice to seize the fleeting opportunity to introduce capital. They constantly invited experts to guide and compile planning, personally participating in research and listening carefully to experts’ opinions. “The integration of executive leadership and professionals was the golden key to solving problems.”156 At the same time, they also learned valuable experiences about urban development through visiting cities. In the face of new situations that often arose because of the rapid urban development and the constant changes in the positioning of SSEZ from the central government, they had to make an immediate adjustment to the planning. Thus, a leap-forward forecast of population scale from half million to 1 million to 3 million emerged undoubtedly. All these cases indicated that Shenzhen leaders were good at learning and listening to suggestions, daring to challenge and change, but also showing the style of dictatorship. In the early stage of Shenzhen, there was no lack of cases in which top leaders’ word was the final decision or direct order. Even nowadays, the words of leaders at higher rank are still as serious as an imperial edict to the lower ranks, which is a common phenomenon in Chinese officialdom. Therefore, top leaders’ ability and accomplishments are key factors in government decisions.

People’s needs also had an important impact on planning. If people did not put forward requirements of living conditions, urban planning and construction would be more responsive to capital expansion, but ignoring housing issues. In the early stage of Shenzhen, there were obvious stage characteristics that people did not ask for better living conditions and the urban environment.

Wu Songying, the previous vice minister of Shenzhen Propaganda Department and director of Shenzhen Special Zone Daily, arrived in Shenzhen in July 1981 and stayed temporarily in Xinyuan Hostel (nowadays the Shenzhen Guest House). He described the place upon his arrival and the dormitory later as following:

“It was as big as a classroom, standing a dozen bunk beds….I went to the other side of this bungalow and took a shower in the public bathroom.” 157 “The dormitory buildings for government cadres were built in Tongxinling which was a desolate place a dozen years ago. We walked on a hilly path and passed an embankment between two small ponds, then arrived at the office building…Service interruption of water and

156 Ganshi Zhou, “Historical experience of Shenzhen Planning”. Urban Studies Vol.17 No.4 (2010): 6. 157 Songying Wu. The Hardships and Splendor of Shenzhen (Guangzhou: Guangdong People’s Publishing House, 2015), 43. 54 power was a common occurrence…The only market of the city, Nantang Market, was more than one hour distant by bike.”158

The description by Wu reflected the situation of the period from 1979 to 1983. The early living environment in Shenzhen was consistent with the development stage of the national housing, reflecting the level of the national economy and urban development. That the extremely frugal principle of construction was implemented nation-wide from 1949 to 1979 before the economic reform, coupled with the stagnation in development in the ten years of the , led to an extremely low level, 3.5-4.0 square meters per capita, in the average living area of the country. There were countless families without housing, and the common living experience was "crowded room, personal privacy not guaranteed, lack of storage space, inconvenience, lack of a sense of security and stability”.159

In addition to the poor living conditions prevalent throughout the country, there were special reasons why early Shenzhen people did not ask for better living quality. Unlike the natural development of a city, Shenzhen became a city from a small border town in one day because of political policy. Thus, its population growth was not led by the natural birth/death or the normal population flow, but was gathered together in a very short period under the power of the state. Most of the people who were transferred under the organizational command from all over the country came with doubt and reluctance, and would have preferred to come alone rather than bring the whole family, without any intention to settle down in Shenzhen. Another kind of people was recruited by factories, mostly from small towns or rural areas, young and low-educated, mainly hoping to make some money in Shenzhen and go back to their hometown later. Therefore, the early population structure of Shenzhen was characterized as quite uneven with a big portion of single (including married but came alone without family), young and industrial population. The housing requirement of this population structure was relatively a basic type. The most basic residential functions, i.e. a place to eat, sleep and wash, could satisfy them temporarily. It explained why there only industrial zones and living areas were arranged in the first edition of Shenzhen master planning. This not only reflected the only goal of the government at that time was the development of industry to meet the needs of capital, but also reflected the status of Shenzhen people, simply working, eating and sleeping.

With economic development and much more contact with the outside world, Shenzhen people obtained more fresh ideas and understanding of living quality brought by foreign investors, overseas Chinese, newspaper and broadcasting. As people’s life being relatively stable, they began to pursue a better quality of living environment, which was reflected in the 1986 planning adding land-use and construction plans of public service

158 Ibid.,53. 159 It is a summary of the environmental psychology sampling survey of new built employee dormitories in nine cities of Shenyang, Shanghai, Fuzhou, Wuhan and so on in 1980, excerpted from Lü Junhua, Peter G. Rowe, Zhang Jie, ed. Modern Urban Housing in China 1840-2000, (Beijing: Tsinghua University Press, 2002), 210. 55 facilities, cultural buildings, education, urban parks. Increasing public facilities not only created a better investment environment but also greatly improved the living quality of Shenzhen people. The improvement of ordinary people’s cognition and living demand promoted the adjustment of urban planning and construction. It is an important aspect of sustainable urban development that a city attracts and retains talent by making changes.

2.4.2 Stage Two By entering into the 1990s, SSEZ began to take shape after a decade of rapid development. Apart from the industrial zones, Luohu commercial center was formed with China’s tallest building, the International Trade Center Building, at its center, and a series of major facilities were under construction, such as Luohu Entry Port, Shekou Port, Huangtian Airport, Beihuan Road, Binhe Road, , etc.. The continuously inproving economic indicators and the completion or start-up of various projects were pushing Shenzhen into a new stage. The year 1992 was an important year for China’s economic reform, with Deng Xiaoping’s second tour to the south in January giving a strong impetus to deepen China’s reform. In particular, the Tour solidified SSEZ’s position as being the pioneer of reform.

In the first unified land conversion on June 18, 1992, the villagers within the SSEZ were transformed into citizens while the rural collective land was transformed into state-owned land. In the same year, the State Council approved Shenzhen to revoke Bao’an county and establish Bao’an district and Longgang district. Significant changes in the size of state-owned land, population and administrative structure promoted Shenzhen to redesign its development strategy and urban planning. In June 1993, the SMPC officially launched the Shenzhen City Master Planning (1996-2010) (see photo 2.10), which was completed in December 1996. The State Council approved it in 2000 after several rounds of expert demonstration and examination.

The first feature of the 1996 planning was that the planning area extended to the whole city, i.e., from 375 square kilometers inside the Second Line to about 2000 square kilometers outside the Line. In the planning, the city would expand outward through three development axes (see photo 2.11), respectively linking Guangzhou, Dongguan and Huizhou, and developing clusters along the main traffic routes, thus, to form a “cluster-network” urban structure. This reflected the inadequacy of space inside SEZ and the eagerness of capital seeking new reproductive space. When the government was still making economic development its priority, it was necessary to expand the planning territory to support the needs of capital expansion fully. The planning also considered, for the first time, the relationship with the urban system of the Delta and the coordinated development with Hong Kong after the 1997 handover. The intention was obviously to start weaving a network for freer capital flows in the southern region.

Photo 2.10: Shenzhen City Master Planning (1996-2010)

56

Source: http://www.szpl.gov.cn/ywzy/ghzs/plan/plan.htm (access on 17/9/2018)

Photo 2.11: Urban structure of Shenzhen City Master Planning (1996-2010)

Source: http://www.szpl.gov.cn/ywzy/ghzs/plan/plan.htm (access on 17/9/2018)

Another important feature of the 1996 planning was that it aimed to build “a beautiful city full of vitality” and “make people live happily”. Housing development was listed as one of the six development goals: “to determine population distribution and habitation pattern; to provide adequate housing land; to meet the needs of citizens for adequate housing choices; and to be equipped with public safety, education, healthcare, cultural and recreational facilities, physical fitness and communication facilities to meet the needs of future life”.160 Through 20 years of rapid development, both the government

160 Quoted from “Urban Functions and Development Goals”, Shenzhen City Master Planning (1996- 2010). http://www.szpl.gov.cn/ywzy/ghzs/ztgh/zhineng.htm (access on 13/9/2018). 57 and individuals have accumulated certain wealth. Many people decided to settle down in Shenzhen, with their families who had been left in their home town moving to Shenzhen. With the gradual increase in the number of seniors and children, the population structure in Shenzhen changed, while people’s requirements for housing quality and good environment were raised. The commercialization of housing gave people the right to express their wishes by choosing housing and community suitable for their economic conditions and family needs. From the government perspective, the goal was no longer the simple pursuit of capital accumulation as in the early stage but started to consider the sustainable development of the city, and one of the important and tough tasks was to make the city affordable and livable for the large population. With the thorough termination of the housing allocation system, the real estate industry has gradually become a new pillar industry, attracting the sensitive capital rushing in rapidly. Therefore, the elevating of housing development to an important position in the overall planning was in line with not only people’s pursuit of quality of life but also the needs of capital reproduction.

In the process of compiling the 1996 planning, some different practices were adopted. A public exhibition was organized to solicit public opinions before the planning was submitted for approval. This pioneered public participation in Shenzhen urban planning practice. It showed that the government paid more and more attention to public opinion, at least seemingly, and gave citizens the opportunity to express their thoughts. At the end of 1997, Shenzhen built the first planning exhibition hall in China, which specialized in exhibitions of master planning, important detailed planning and design, such as the CBD detailed planning, and exhibitions and publicity of some planning projects irregularly. Shenzhen citizens showed unprecedented enthusiasm for participating in the planning and management of the city, which inspired their love for the city and a sense of ownership. It indicated that the government was concerned not only about people’s livelihood, but also the voice of ordinary people. It can be speculated that the voice of the public will play an increasingly important role in urban development.

Regarding planning implementation and urban management, to restrain the phenomenon that the indicators of land parcel were revised by developers to gain more benefit through various channels in the past, in 1998, the Shenzhen Urban Planning Ordinance was formulated relying on the legislative power of Shenzhen. Referring to the planning management measures of Hong Kong, the “statutory plan” was introduced, that was, detailed and clear developmental indicators for each parcel was worked out and given the status of statutory documents. At the same time, the Urban Planning Board of Shenzhen (UPBSZ) was set up, responsible for drawing up statutory plans and making decisions in major projects. The UPBSZ consisted of 29 members, of whom no more than 14 were government officers and others were professionals and social figures.161 It was a statutory body with ultimate decision-making power in urban

161 See http://www.szpl.gov.cn/szupb/jgzn_6708/201105/t20110506_457325.html (access on 6/10/2018). 58 planning, making it difficult for developers or even government agencies themselves to revise the parcel plans. These management institutions and measures were effective means for the government to curb the excessive pursuit of profits by capital. Instead of being fully responsive to capital requirements in the previous stage, the government started to make changes. Urban planning has become more effective in controlling urban development.

Although strengthening supervision in the planning practices, in fact, the result of the implementation of the 1996 master planning turned out to be not so satisfactory. When planning to expand outside the Second Line to form the cluster-network pattern, frankly speaking, it was a bit idealistic after all. In the first two decades of the economic reform, most of the limited government funds and public resources were invested in the SEZ. The planning implementation relied on the support of the land system by conducting unified land conversion. Therefore, the development of the SEZ was orderly. At the same time, the lower cost outside the Second Line attracted some of the capital which was eager to seek the highest profit. However, due to the weak administrative resources, the inadequate provision of public services, and the equivocal land system mingling state-owned land with collective land, the development outside the SEZ was disorderly in the way of spreading out and self-governance, which resulted in the planning management and control existing in names only. Because of the vast differences between inside and outside the SEZ, although reasonable overall planning was compiled, it was difficult to put it into spatial practice successfully.

2.4.3 Stage Three Shenzhen entered the Twenty-first Century with difficult strides in terms of both internal and external challenges. The negative factors brought about by the rapid development of more than 20 years have gradually emerged, beginning to confront the difficulties in land, energy, population and ecology. The gap between the rich and the poor was widening to create increasing social inequality and contradictions. The vice mayor Wang Ju162, one of the pathbreakers in Shenzhen people’s minds, was ‘shuanggui’163 (双规) at the beginning of the new century for taking bribes and abusing his power, which greatly undermined public confidence in the government. Outside the city, first of all, Shanghai Pudong began its reform and opening up from the 1990s, rapidly becoming a new economic star of the whole China. The competition in the financial sector between Shenzhen and Shanghai reached unprecedented intensity throughout the 1990s. In September 2000, although the kept its main board from merging with Shanghai, it was stipulated that it could no longer issue new

162 Wang Ju, born in March 1942, led 20,000 engineering soldiers south to Shenzhen in 1981 to support Shenzhen’s urban construction. He was a highly respected and heroic leader of the regiment. He served as deputy secretary-general of Shenzhen Municipal Government, director of the Shenzhen Land and Resources Bureau, director of Shenzhen Planning and Construction Bureau, Secretary of Longgang District Committee successively, and then the vice mayor since 1995. He has been in charge of the departments of land, planning and construction for many years. Because of corruption, bribery and the use of power for seeking a huge amount of illegitimate interests for his children, relatives and friends, he was ‘shuanggui’ in 2000 and sentenced to 20 years in prison in 2001. 163 ‘shuanggui’ is a disciplinary measure outside the regular legal system under which party members are detained and interrogated. 59 shares. Sensitive capital flowed out of Shenzhen immediately and quietly. Some news came out that the most influential enterprises of Shenzhen, such as the China Merchants, Ping’an Insurance, , and ZTE, were planning to move to Shanghai. Secondly, the nearby urban agglomeration of the was also rising to become a strong competitor of Shenzhen. And the third one was Hong Kong, just on the other side of Shenzhen river, whose government started to compile “Hong Kong 2030: Vision and Strategy”164 to be ready for the second taking off in the new century. The future of Shenzhen’s development has become a topic for hot debate and speculation among both the government and people.

Under such a situation, the SMPC put forward a major strategy of developing Shenzhen into an international city, and for the first time, proposed three pillar industries of high-tech industry base, modern logistics hub, and regional financial center.165 Subsequently, the Committee organized the formulation of the second urban development strategy. Through 2003-2005, Shenzhen Planning Bureau and CAUPD compiled “Shenzhen Urban Development Strategy of 2030” (known as Shenzhen 2030). In the same year, “Shenzhen Basic Ecological Line Management Regulations” were promulgated and their scope was delimited (see photo 2.12). According to this development strategy, Shenzhen launched a new master planning in 2006. The Comprehensive Planning of Shenzhen City (2010-2020) (see photo 2.13) was completed in more than two years and was approved by the State Council in August 2010.

Photo 2.12: Control Map of Shenzhen Basic Ecological Line (2005)

164 Pui Yin Ho. History of Hong Kong’s Urban Planning 1841-2015. (Hong Kong: Chung Hwa Book Co. (H.K.) Ltd, 2016), 325-7. 165 See “Work points of 2003 of the Shenzhen Municipal Committee and the Shenzhen Municipal Government” Shenzhen[2003] No.4, 19th February 2003. http://www.sz.gov.cn/zfgb/2003/gb323/200810/t20081019_96121.htm (access on 13/9/2018). 60

Source: Urban Planning Society of Shenzhen (UPSSZ) http://www.upssz.net.cn/news/newsinfo.aspx?id=616 (access on 17/9/2018)

Photo 2.13: Comprehensive Planning of Shenzhen City (2010-2020)

Source: Urban Panning and Land & Resources Commission of Shenzhen http://www.szpl.gov.cn/ywzy/ghzs/201710/t20171024_443924.html (access on 3/1/2017)

In this 2006 planning, Shenzhen was planned to develop into an “innovative,

61 comprehensive economic zone, a city of national economic center, an international city jointly developed with Hong Kong.”166 Around the four goals: regional cooperation, economic transformation, social harmony, ecological protection,167 the 2006 planning had several distinct features. Firstly, regarding industrial structure, the four pillar industries were defined, high and new technology, modern logistics, modern finance and cultural industry,168 proposing a series of measures to consolidate and develop these four pillar industries. Secondly, the control scale of the permanent resident population in the planning period was 11 million,169 and for the first time, the concept of urban management and service population was put forward, which included permanent residents and temporary residents living in Shenzhen for more than half a year.170 This management and service population was taken as the basis for arranging public service facilities, transportation, and municipal facilities. This was a very suitable concept for a city of immigrants. However, due to the difficulties in counting the temporary population, the size of the management and service population was difficult to predict, thus, not mentioned in the planning. The last, but the most important feature was the land use pattern. The 2006 planning was the first non-expansive urban master planning, that was, the total amount of renewing land use (190 square kilometers) exceeded the newly added land use for construction (140 square kilometers). During the planning period, the newly developing land was mainly obtained by regenerating the existing land use.171 This practice of guiding the spatial transformation through planning transformation was an innovation in China. In conjunction with a series of urban renewal and transformation measures afterward, Shenzhen has undergone many explorations in urban regeneration and put forward a “Shenzhen Model”, i.e., government guidance and market operation, to solve the problem of inherent shortage of urban space172 to a certain extent.

In residential construction planning, the keyword was affordable housing. The price of commercial housing in Shenzhen has been rising steadily, becoming an unaffordable item of consumption for most ordinary citizens. The government has realized that industry upgrading and economic transformation necessitated the continuous introduction of new talent. Therefore, providing affordable housing, superior public service facilities, and a friendly employment environment were significant in retaining talent. The planning proposed to improve the social housing security system and vigorously develop the construction of affordable housing with the goal to reach per capita residential area of 33 square meters for the permanent population and a well- off living quality.173 Shenzhen’s 2035 planning is under compilation. Relying on the concept of the Guangdong-Hong Kong-Macao GBA, Shenzhen will develop more

166 See section11, Text of “Comprehensive Planning of Shenzhen City (2010-2020)”, http://www.szpl.gov.cn/ywzy/ghzs/201710/t20171024_443924.html (access on 3/1/2017) 167 Ibid., section14. 168 Ibid., section25. 169 Ibid., section19. 170 Ibid., section20. 171 Ibid., section18. 172 Shenzhen covers an area of nearly 2000 square kilometers, which is only one eighth of Beijing, one third of Shanghai and one fourth of Guangzhou. 173 Ibid., section107. 62 closely with its surrounding cities and have the opportunity to realize spatial expansion. It is believed that Shenzhen will enter a new stage of development after the new master planning is issued.

2.5 Conclusion It has been proved that Shenzhen’s industrial upgrading and economic transformation have enjoyed great success. Shenzhen’s industrial structure has been optimized, and its economic benefits have been continuously improved, which has regained national and even worldwide attention for Shenzhen. This was the result of strong government leadership conducting guidance for direction, policy support and moderate intervention through urban master planning and related policy coordination.

In the urban development and housing construction, the Shenzhen government controlled and guided all aspects of land supply, housing policies formulation and master planning, thus, always controlled the general direction of urban development. Although there have been various problems and even crises in the development process, such as, in the early stage, because of the lack of funds and the needs of development, it had to rely entirely on foreign investment. Thus, the government had to cooperate with the needs of capital and the ecological environment inevitably suffered a certain degree of damage; the establishment of the Second Line has brought about a geographically uneven dual development inside and outside the SSEZ; the unified land conversion has accelerated the formation of the urban villages; the binding of government finance and land system continued to push up housing prices, these were inevitable in the course of development. Whether success or failure, this was the result of capital expansion and the result of the competition between capital and government. Under the leadership of the central government, the Shenzhen government has always found opportunities to adopt policies of regulatition and control, constantly adjusting the developmental direction of the city’s industry and space, and constantly improving the housing security system.

Shenzhen’s experience shows that China’s 40-year economic reform has been a great success in meeting the needs of local people and global capital expansion. Because of the characteristics of capital, it inevitably led to uneven spatial development. As a developmental state, even if a certain degree of compromise was needed in a given period, China’s government could formulate industrial policies to affect the direction of capital flows, which was different from the way in which capital was completely free- flowing in capitalist countries. Although the current marketization in China is already relatively high, the government still has strong decision-making capabilities to control capital expansion to achieve a certain balance. This is the market economy with Chinese socialist characteristics.

63

Chapter 3: The Role of Developers

3.1 Introduction

China’s cities have undergone tremendous changes since the economic reform, among which, the change of housing pattern has led to the transformation of urban living space and its impact on people’s lifestyle. The housing development is not only the epitome of economic development and social transformation but also one of the forces of urban spatial development. In chapter two, it was explained that a series of government policies of land reform and housing reform had pushed housing from the welfare system to the housing commercialization system, solved housing demand through market means, and greatly improved the quality and environment of housing and community. Housing commercialization gave birth to the real estate industry, which soon became the pillar industry of the national economy. Real estate companies also emerged as the times required, and have achieved considerable development.

Real estate is an industry with distinct regional characteristics. Each city presents different developmental features because of differences in historical and cultural backgrounds, geographical and natural conditions, economic development level, local governance styles, etc. As the pilot of the economic reform, Shenzhen has been in a leading position in housing reform and real estate development. In addition to the first land auction in China mentioned above, there were many “national first” records in Shenzhen. For example, in 1980, the first real estate company, Shenzhen Special Economic Zone Real Estate Company (SSEZREC), was established and the first commercial housing community in China, Donghu Iiyuan (东湖丽苑), was developed by SSEZREC in cooperation with Hong Kong Miaoli Real Estate Group (妙丽集团). SSEZREC provided land while Miaoli was responsible for the funds and sales, and the profits were distributed in the proportion of Shenzhen 85% and Miaoli 15%. Even still in the drawing stage, the housing was snapped up by Hong Kong, Macao and some overseas Chinese, because the price of HK$2,730 per square meter was very low for these buyers. Since China implemented the welfare housing system at that time, there was no concept of property management services. In order to meet the needs of residents in Donghu Liyuan, Shenzhen Property Management Company, the first property management company in China, was established, which was a subsidiary wholly owned by SSEZREC. 174 Shenzhen also introduced the first local property management regulations in 1994, “the Regulations on Property Management in Residential Area of SSEZ”, while the national unified “Property Management Regulations” was promulgated ten years later in 2004. In 1988, Gui Qiangfang175, who

174 Luo Jinxing. “We Built the First Commercial Housing Community of China”. Oral History of 30 Years of Reform and Opening Up. http://www.gzlib.gov.cn/ztoralhistory/16354.jhtml (access on 15/2/2019) 175 Gui Qiangfang, born in 1957, graduated from university in 1984 and went to Shenzhen. He worked in the municipal government infrastructure office, land reform office, and Land Bureau successively. He founded the first real estate agency company in 1988, and also the magazine "China and Foreign Real Estate Guide". In 1989, he hosted a seminar on China’s property management and a real estate training course for senior cadres. In 1991, he edited the first issue of "Shenzhen Real Estate Yearbook". He is known as the godfather of China real estate intermediaries. 64 was working in the Shenzhen Housing Reform Group, discovered that intermediaries played an important role in real estate development when he visited Hong Kong. Therefore, he applied to set up China’s first real estate agency, International Real Estate Consulting Co., Ltd, under the guidance of which, Vanke (万科), the leading real estate company nowadays, started the housing development business through attending the land auction in November 1988. The auction that Vanke participated in was the second land auction in China, but it was the first time that private enterprise obtained the qualification for real estate development through land auction.176 In 1991, Vanke established the first owner committee of China in its first completed project, Tianjing Garden (天景花园), building a platform for co-management of property owners and a property management company.

In addition to the beginning, rapid development and great achievement in real estate industry, as well as its high quality in design and property services, hundreds of developers have sprung up in Shenzhen (see table 3.1), including some well-known enterprises. For example, Vanke, the leading developer, specialized in building ordinary housing and providing high-quality property services; The China Merchants Real Estate 177 created the “community comprehensive development model” to combine residential and industrial development; The Overseas Chinese Town Real Estate 178 was praised as the first brand of China’s tourism developer. Shenzhen developers had obvious factional characteristics, which firstly could be divided into two camps: state-owned developers and private ones. The state-owned companies were subdivided into local and outside ones. Local developers referred to those which were established by the SMPG for the construction and development of the SSEZ in its early stage, such as the SSEZREC and Shenzhen Construction Investment Holding Company which was founded after the transfer of the 20,000 engineering soldiers.179

176 See Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 65-66. 177 The Hong Kong Merchants Bureau, under the Ministry of Communication, began to develop the Shekou Industrial Park in 1979. The Shekou Industrial Park Real Estate Company was established in 1981, but it was not officially listed until 1983, mainly responsible for the planning and construction of the Industrial Park. As the business expanded to other districts of Shenzhen and other cities of the country, in 1997, the company renamed to Shenzhen China Merchants Real Estate Co., Ltd. thanks to the experiences in developing the Shekou Industrial Park, the China Merchants Real Estate is characterized by its advocacy of the ‘community comprehensive development model’ and ‘green real estate development concept’. See Zheng Hu, Shaobin Lin, Xinzhi Lu, ed. The China Merchants and China’s Real Estate Industry (Beijing: ZhongHua Book Company, 2010). 52,57,172,207. 178 Overseas Chinese Town Holdings Company (OCT) was established in November 1985. It is affiliated to the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council. It acquired a land of 4.8 square kilometers in Shahe area of Shenzhen for independent development. It built the earlies theme parks in China, the Chinese Folk Culture Village and the . And replying on the theme parks, it built complex communities of high-end hotels, residences, offices, etc. See Shenzhen Real Estate Association, ed. Shenzhen Classical Properties. (: People’s Publishing House, 2002), 83-86. 179 In 1982, China dismobilized 1 million troops and abolished railway and infrastructure engineer troops. Shenzhen was in the period of construction, so it accepted 20,000 engineering soldiers transferring to civilian work. These officers and soldiers established Shenzhen Construction Investment Holding Company, which undertook many government projects and became the main force in the early construction of the SSEZ. Later, it was reorganized into Shenzhen Construction (Group) Co., Ltd. with real estate development, construction and property management as its main business, and was merged by Evergrande Group in 2011. See Wu, Songying. The Hardships and Splendor of Shenzhen (Guangzhou: Guangdong People’s Publishing House, 2015), 06. 65

The outside developers were institutions accredited or established in Shenzhen by various ministries and commissions to support the development of SEZ. For example, the China Merchants Real Estate and OCT mentioned above, and Shenzhen Industrial and Trade Center of China Aerospace Technology Import and Export Corporation which developed the area around the Shanghai Hotel, belonging to the Ministry of Aerospace Industry. 180 Directly under the central government, these companies acquired a large amount of land to develop when they entered Shenzhen, separating from the urban planning and construction management of SMPG. In the early stage, Shenzhen appeared to be in a situation of “group separation”. Therefore, the start of private real estate companies was extremely difficult. At the beginning, private developers were represented by Vanke and Jintian (金田). Later, with the construction of Futian CBD and the rise of businesspeople, there emerged Chaoshan factional developers represented by Galaxy Group (星河集团), Kaisa Group (佳兆业集 团), and Excellence Group (卓越集团). Among the many developers, Vanke focused mainly on residential product research and development, especially in housing for ordinary people. Vanke’s growth was a mirror of Shenzhen’s housing development and also reflected the transformation of Shenzhen people’s way of life.

Table 3.1 number of real estate developer (1990-2016)

year number year number year number

1990 80 1999 563 2008 550 1991 101 2000 578 2009 N/A 1992 138 2001 560 2010 668 1993 188 2002 564 2011 687 1994 337 2003 600 2012 732 1995 N/A 2004 600 2013 751 1996 398 2005 732 2014 821 1997 573 2006 650 2015 857 1998 581 2007 598 2016 856

Source: Editorial Board of Shenzhen Real Estate Yearbook, ed. Shenzhen Real Estate Yearbook 1991~2017 (Shenzhen: Shenzhen Press Group Publishing House, 1991~2017).

As indicated before, in the system of commercial housing, the developer stands between the government and the buyer. Developers gain land and developmental approval from the government. By doing projects successfully, developers contribute to increase local employment, tax revenue and adding value in the region to influence urban development. To the buyer, developers create designed living environment and

180 China Aerospace technology Import and Export Corporation, affiliated to the Ministry of Aerospace Industry, established an office in Shenzhen in 1980, and was upgraded to Shenzhen Industrial and Trade Center in April 1982. Shenzhen Aeronautical Building Industrial Co., Ltd. was established in 1985, and renamed to Shenzhen Nanguang in 1987. In 2007, Shenzhen Nanguang Group Co., Ltd. was changed to Shenzhen Zhonghang Real Estate Co., Ltd. Zhonghang has developed Shanghai hotel area and established Tianhong Mall, a local chain department store in Shenzhen. Details see the Growth Exhibition (1979~2019) of the AVIC INTL in its website https://www.avic-intl.cn/ (access on 15/2/2019).

66 way of life for the future dwellers. In the system of affordable housing, developers need to decide if they are willing to invest in the small profit business to build a strong relationship with the government and get some potential opportunities to collect profit in other areas. This chapter is on the role of the developer. After a brief outline of the development process of Shenzhen’s real estate industry, it takes Vanke as a case study, as it is a developer growing in Shenzhen and focusing on residential development, to examine how developers can respond to the government’s variety of real estate control policies and promote the housing development in Shenzhen. Meanwhile, it aims to investigate how they conduct the housing research and development (R&D), improve construction quality, build community landscape and space, communicate with customers, and provide good property services, to satisfy people’s ever-changing requirements in housing and community, to promote people’s knowledge and demands on housing, and to affect people’s everyday lives.

3.2 The Rise, Prosperity and Current Situation of the Real Estate Industry in Shenzhen Innovation was the driving force of economic growth and development of capitalist. It included innovation in product, technology, market, resource allocation, and organization. Creative destruction led to the business cycle of prosperity, recession, depression, and recovery.181 In China's reform and opening-up, the commercialization of housing has brought about new products, new markets and new enterprises, thus forming a new industry. Schumpeter’s theories of innovation and business cycle can be drawn on to explain the development process of China's real estate industry from an emerging industry to a traditional one. However, the rise and fall of the industry was not only influenced by the internal innovation of enterprises and entrepreneurs, but also by other complex factors, such as government policies, people's living standards and consumption levels.

The development of China’s real estate industry in 40 years can be divided into major stages of approximately ten years each. The first decade, 1978~1988, was the exploratory period of land reform and housing reform, and also the budding period of the real estate industry. The real estate development entities were state-owned enterprises, and most of the projects were according to government plan and budget. Apart from foreign-related commercial housing, most of the housing was distributed in the form of welfare. For example, Tongxinling (通心岭)182 community and Yuanling (园 岭) community (see photo 3.1) were the earliest multi-story residential buildings for Shenzhen government personnel. The second decade began with the first land auction

181 Joseph A. Schumpeter, Redvers Opie trans. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. (New Brunswick and London: Transaction Publishers, 1983). 182 Tongxinling community was the earliest government staff dormitory built in 1981. However, due to lack of construction experience, although the dormitory was built up, there was no accessible road, no connected water, power and even sewers, which made it impossible to stay in. This lesson made the early builders understand that before conducting construction, they need to firstly finish ‘san tong yi ping’ (三通 一平), that was, roads, water and power connected and the site leveled off. Details see Bi Wang, Xiaopei Mo, Shenzhen Museum, ed. The History of Shenzhen Special Economic Zone. (Beijing: People’s Publishing House, 1999), 36. 67 in Shenzhen. From 1988 to 1998, it was a trial period in which the new land system and the housing provident fund were all in the experimental stage. The development in this stage was still dominated by state-owned companies, but China’s first generation of private or joint-stock real estate companies were born. Wanda (万达)183, the representative of the northern region, and Vanke, representing the southern region, started their exploration of the real estate industry in 1988. Especially after Deng Xiaoping’s southern tour in January 1992, the real estate investment suddenly became a hotspot for businesspeople to compete for. There appeared the repeated process of real estate overheating and government control and regulation (see chapter two). During this stage, real estate companies were constantly exploring and accumulating experiences, including development models and directions, internal management, product quality, and relationship with both the government and the customs, etc. The third decade began in 1998 when China abolished the welfare housing system and ended in 2008 when the global financial crisis was triggered by the subprime mortgage crisis in the United States. This period was known as the “golden decade” of China’s real estate development. The cancellation of the welfare housing system completely pushed housing into the market, creating the outbreak of personal housing consumption. In 2004, the state fully implemented the land auction system, which not only enabled private enterprises to gain the equal right to compete with state-owned enterprises but also attracted capital to compete for the real estate market. The bundling of capital and land led to the crazy hoarding of land by developers, which pushed up the land price, and later, pushed up the housing price to an unprecedented high level. It was not until the financial crisis that the real estate development turned to the adjustment stage. After a brief adjustment in 2008, the Chinese government relaxed real estate policies to stimulate domestic demand, and the real estate industry entered another round of rapid growth. In the fourth decade, the government tried more supervision and control policies. Urban development started to focus on the construction of affordable housing and urban regeneration. With the scarcity of land resources becoming more and more obvious, the competition between developers was more intense, and they were all seeking new development directions. Some developers, such as Greentown (绿城中国), R&F (富力集团), Wanda and Country Garden (碧桂园) have carried out large-scale overseas expansion. For ordinary people, this was the decade when the rich and the poor were further divided greatly, and housing prices have been rising wildly.

Shenzhen has also experienced these stages. As one of the first cities to develop a real estate industry, Shenzhen real estate development has made an impressive

183 Wanda Group, one of the most famous real estate developers of China, was founded in 1988 by Wang Jianlin who resigned his government position and started his business by taking over a government- owned and heavily indebted real estate company, Dalian Xigang Residential Development Company. He tried very hard to get a loan of RMB500,000 to kick off his first project. Wanda became a private owned company when Dalian Xigang Residential Development Company was shareholding restructured to Dalian Wanda Real Estate Company in 1992. In the following 23 years, Wanda experienced four important transformations and grew from a real estate developer to a transnational firm with its business covering real estate, hotel, department store, cultural and tourism, children’s theme park, cinema and movie, sports and entertainment…and so on. Details see Wangjianlin’s inverview by Fanluxian, Forbes' Shanghai bureau chief 07/02/2014. 68 achievement, and the city’s appearance has also undergone profound changes. The overall performance can be illustrated by a series of data and charts (see table 3.2- 3.3, figure 3.1-3.6). Table 3.2 and figure 3.1 are about the GDP of Shenzhen over the years and the proportion of real estate contribution. The data shows that Shenzhen’s economy has been in a period of rapid growth since the reform. The GDP of 2016 was nearly 10,000 times that of 1979, and the GDP contributed by the real estate industry was nearly 38,000 times. From figure 3.2, it can be seen that although the contribution rate of real estate to GDP rose and fell in a certain period of time, and even dropped to the lowest 1.2% in 1989, its overall trend was rising, from 2.38% to about 9%, and it maintained a certain stability since then. The 9% share does not seem to be outstanding for a pillar industry, but this is only the share of the real estate industry itself. It can affect dozens of industries in the upstream and downstream, thus, it has an important impact on the economic development. Table 3.3 and figure 3.3-3.6 list the investment, floor area of construction, sales, price and other data of Shenzhen commercial housing from 1990 to 2016. Undoubtedly, real estate investment was on the rise, maintaining relatively stable growth in several periods, and some adjustment then leaping growth at certain nodes. In 1992-1998, the investment was within 10 billion, then after 1999-2000, it suddenly jumped to 20 billion in 2001, reaching a peak, more than 30 billion, in 2006 and 2007. An adjustment started in 2008 and ended in 2010, then a new surge began. It took only five years to break through 100 billion in 2016. The annual under-construction area and the newly started construction area were directly related to the investment amount; therefore, the development trend and the turning point were similar, but the overall rate of increase was lower than the investment amount. Moreover, it is worth noting that the data of 2016 showed that the investment increased sharply, but the area under construction, especially the newly started area in that year, decreased actually, which can explain, to some extent, why the cost of real estate development, especially the upfront cost, increased substantially. Developers always passed their cost onto consumers through housing prices, which can be seen from the housing price data. Every turning point was accompanied by the rise of housing prices to a new level, especially in 2015 and 2016 when there was an increase of 40% and 60% respectively.

Although Shenzhen’s real estate industry was booming, the problems caused by high housing prices have become increasingly prominent. Unaffordable housing prices made the polarization between the rich and the poor more obvious, and the public’s doubts about the government and developers were getting stronger. Shenzhen used to be a city that many people yearned for, but now the high housing prices made people discouraged. Many college graduates no longer chose Shenzhen because they estimated they could not afford a house in their lifetime. It was better for them to go to some second or third-tier cities with less pressure. The increase in housing prices also pushed up the price of rent and other living expenses. Those people who used to work in Shenzhen could not stay any longer and chose to return to their home town. Many factories and construction teams found it difficult to recruit workers. As the cost of expansion and human resources increased dramatically, many enterprises began to

69 move out of Shenzhen. Foxconn184, listed in the world’s top 500, set up a factory in Shenzhen in 1988 and developed it into the headquarters of . As early as 2008, it began to set up branches in cities with lower costs in land and workforce, such as Nanning, , and Langfang, and even to countries with much lower costs, like and . Huawei185, which was founded and grew up in Shenzhen, also moved some departments to Dongguan. Land finance and the excessive development of real estate has crushed the growth space of other physical industries, which was harmful to the overall economic development in the long run.

The Shenzhen government may have realized this problem as early as 2008, but it only took partial measures to alleviate it. Because land income and real estate tax was one of the main sources of fiscal revenue, and GDP was the indicator of government officials, these problems have not been given enough attention and systematic guidance until 2018. On June 5, 2018, the Shenzhen Housing and Construction Committee released the “Opinions on Deepening the Housing System Reform and Accelerating the Establishment of Multi-sources Supply and Security System through Rent and Purchase” which was called the second housing reform in Shenzhen. It aimed at “building a multi-level, differentiated and fully covered housing supply and security system for different income levels of residents, professionals and other designated groups.” These Opinions divided housing into three categories: commercial market housing, policy-supported housing, and public rental housing, accounting for 40%, 40%, and 20% respectively. Policy-supported housing included talent housing and affordable commercial housing. Talent housing accounted for 20%, rentable and saleable, providing to qualified talent, with the floor area of each unit mostly less than 90m2 and the rental/sales price about 60% of the market price. Affordable commercial housing accounted for 20%, rentable and saleable, providing to registered residents in line with income restrictions, with the floor area of each unit mostly less than 70m2 and the rental/sales price about 50% of the market price. Public rental housing was for eligible low/middle-income households, employees in relevant industries providing basic public services, advanced manufacturing workers, and other eligible groups. The floor area of each unit was mostly 30-60m2, and the rental price was about 30% of the market price. People living in extreme poverty and marginal families living on low- income only paid 10% of the rent for public rental housing. This was the first time that the Shenzhen housing security system included bus drivers, subway drivers, sanitation workers and other practitioners who provided basic public services, and blue-collar

184 Science and Technology Group is a high-tech enterprise specializing in the research and development of 3C products such as computers, communications, consumer electronics, etc. It is widely involved in the development and application of digital content, automotive components, access, cloud computing services and new energy and new materials. Foxconn was founded in Taipei in 1974 by Guo Taiming, and invested in Shenzhen in 1988. Foxconn grew rapidly with more than one million employees and the world's top customers. It is the world's largest electronics technology manufacturing service provider. For details see its website http://www.foxconn.com.cn/index.html (access on 16/2/2019). 185 Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices. It was founded by Ren Zhengfei in 1987 in Shenzhen. For details see its website https://www.huawei.com/en/ (access on 15/2/2019). 70 workers in advanced manufacturing industries. 186 This policy and the successive restrictions on purchase and price were serious challenges to the development of the real estate industry. How the developers coped with these policies and adjusted their business strategies is discussed in the following part with Vanke as an example.

Photo 3.1: Yuanling residential community, Futian District, Shenzhen.

Source: taken from the field research in Futian District Shenzhen, 16/12/2017.

Table 3.2 Gross domestic product and contribution of the real estate industry in Shenzhen (1979-2016) (10,000 yuan) GDP by real *ratio of GDP by year GDP estate industry real estate industry 1979 19,638 467 2.38% 1980 27,012 688 2.55% 1981 49,576 1,152 2.32% 1982 82,573 1,850 2.24% 1983 131,212 3,181 2.42% 1984 234,161 6,301 2.69% 1985 390,222 14,759 3.78% 1986 416,451 15,420 3.70% 1987 559,015 17,347 3.10% 1988 869,807 35,016 4.03% 1989 1,156,565 13,831 1.20% 1990 1,716,665 91,396 5.32% 1991 2,366,630 155,372 6.57% 1992 3,173,194 236,652 7.46%

186 “Opinions on Deepening the Housing System Reform and Accelerating the Establishment of M ulti-sources Supply and Security System through Rent and Purchase”, see http://www.szjs.gov.cn/c sml/bgs/xxgk/tzgg_1/201806/t20180605_12082438.htm?winzoom=1 (access on 5/10/2018).

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1993 4,531,445 328,708 7.25% 1994 6,346,711 472,171 7.44% 1995 8,424,833 673,506 7.99% 1996 10,484,421 842,883 8.04% 1997 12,974,208 955,661 7.37% 1998 15,347,272 1,062,525 6.92% 1999 18,040,176 1,193,283 6.61% 2000 21,874,515 1,585,464 7.25% 2001 24,824,874 1,818,950 7.33% 2002 29,695,184 2,348,995 7.91% 2003 35,857,235 3,184,157 8.88% 2004 42,821,428 4,110,367 9.60% 2005 49,509,078 4,449,012 8.99% 2006 58,135,624 5,202,636 8.95% 2007 68,015,706 6,130,153 9.01% 2008 77,867,920 4,900,481 6.29% 2009 82,902,842 6,772,994 8.17% 2010 97,733,062 7,493,301 7.67% 2011 115,158,598 8,579,914 7.45% 2012 129,714,672 10,888,097 8.39% 2013 145,726,689 12,032,709 8.26% 2014 160,018,207 13,238,647 8.27% 2015 175,028,634 15,644,076 8.94% 2016 194,926,012 17,775,690 9.12% Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2017 (Beijing: China Statistics Press, 2017),27-28. *the ratio was calculated according to the numbers of GDP and GDP by the real estate industry.

Figure 3.1 GDP and GDP by real estate industry (1979~2016) (10,000 yuan)

72

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

GDP DP by real estate industry

Notes: bar chart based on the number of the table 3.2.

Figure 3.2 the ratio of GDP by real estate industry (1979~2016)

12.00%

10.00% 9.60% 9.12% 8.04% 8.00%

6.00% 6.61% 6.29% 4.03% 4.00% 2.38% 2.00% 1.20% 0.00%

Notes: line chart based on the number of the table 3.2.

Table 3.3 summary of residential housing in investment, floor area, the average price floor area of average selling floor area of investment in floor area of residential price of residential residential residential year buildings under residential buildings housing (100 buildings sold construction houses newly started million) (10,000m2) (10,000m2) (yuan/m2) (10,000m2) 1990 7.06 1991 15.34

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1992 45.04 601.10 96.00 1993 66.80 909.51 140.89 1994 87.41 868.86 183.28 1995 62.85 844.20 209.07 1996 78.64 940.61 261.13 1997 85.50 966.18 336.70 1998 99.89 1146.97 372.38 5191 333.27 1999 141.31 1355.62 492.51 5004 492.81 2000 178.68 1576.89 556.82 5275 487.48 2001 209.71 1790.49 593.72 5517 792.24 2002 270.92 2124.86 724.41 5641 747.50 2003 250.19 2072.89 811.90 5679 645.18 2004 255.84 2257.68 802.58 6419 766.91 2005 265.54 2152.58 901.13 6996 753.90 2006 325.05 2157.39 704.89 9190 609.46 2007 331.76 2177.78 500.35 13370 621.91 2008 314.98 2210.36 413.65 12823 471.80 2009 289.78 2087.47 717.40 14858 328.04 2010 304.89 2025.13 413.80 20297 355.17 2011 353.21 1965.63 469.43 19038 367.32 2012 474.40 2107.59 488.44 18848 561.89 2013 594.10 2608.29 527.16 21808 910.13 2014 730.28 2870.00 474.81 23955 549.50 2015 897.13 3156.99 747.83 33,406 777.32 2016 1044.54 3079.28 660.08 53,455 472.09 Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2017 (Beijing: China Statistics Press, 2017),227,230,231,233,236.

Figure 3.3 investment in residential housing (1990~2016) (100 million)

1200.00

1000.00

800.00

600.00

400.00

200.00

0.00

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1990 Notes: bar chart based on the number of the table 3.3. 74

Figure 3.4 floor area of residential buildings under construction (1992~2016) and the newly started (1998~2016) (10,000m2)

3500.00

3000.00

2500.00

2000.00

1500.00

1000.00

500.00

0.00

2008 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016

floor area of residential buildings under construction floor area of residential buildings newly started

Notes: bar chart based on the number of the table 3.3.

Figure 3.5 floor area of residential buildings sold (1992~2016) (10,000m2)

1000.00 900.00 800.00 700.00 600.00 500.00 400.00 300.00 200.00 100.00

0.00

2008 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 1992 Notes: bar chart based on the number of the table 3.3.

Figure 3.6 the average selling price of residential houses (1998~2016) (yuan/m2)

75

60000

50000

40000

30000

20000

10000

0

Notes: bar chart based on the number of the table 3.3.

3.3 Wang Shi and Vanke

Schumpeter believed that the initiative of innovation was entrepreneurship, including the dream of building a kingdom, passion for victory, joy of creation and a strong mind, while the success of innovation depended on the accomplishment of entrepreneurs, including the ability to predict, organize and persuade.187 Therefore, the discussion on the establishment and development of Vanke starts from the introduction of Wang Shi, who is the founder of Vanke, and has been in charge of Vanke for 33 years from 1984 to 2017.

3.3.1 Beginning with Wang Shi When speaking of Vanke, people might immediately think of Wang Shi, an entrepreneur who has had a high profile nation-wide for decades. Wang was born in 1951. Before he finally set foot on the land of Shenzhen in May 1983 to explore what had happened to the former poor and desolate place after the reform and opening up,188 Wang had the experiences of being a soldier, a worker, a college student, and a government officer. His character was tough and ambitious, unwilling to be mediocre. He liked new things and was eager to learn, and was good at discovering and seizing opportunities. His experience in serving as a soldier made him realize his independent and unconstrained character, but also make him aware of the importance of discipline and system. Studying in the college gave him a systematic knowledge base. Working as a government official made him realize the importance of people’s wishes and the opportunities for young people.

187 Joseph A. Schumpeter, Redvers Opie trans. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. (New Brunswick and London: Transaction Publishers, 1983). 188 See Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 4-11. 76

On his arrival in Shenzhen, Wang joined the trade section of Shenzhen Special Economic Zone Development Company (SSEZDC), formerly the SSEZ Administrative Committee. Wang earned his first bucket of gold by trading corn. In 1984 he established the Shenzhen Modern Science and Education Instrument Exhibition Center, which was a subsidiary of the SSEZDC and engaged in import business of mechanical and electrical products. Wang completed the accumulation of original capital through trade. However, his conflict with the parent company was deeper and deeper. In October 1986, the SMPG promulgated the “Interim Provisions on the Shareholding Pilot of State-owned Enterprises in SSEZ,” encouraging large-scale state-owned enterprises to carry out the joint-stock transformation. Inspired and encouraged by the Provisions, Wang was determined to carry out the shareholding reform of the subsidiary to get rid of the complicated administrative personnel relationship with the state-owned parent company. With the support and help of SMPG and through a difficult negotiation with the parent company, the shareholding transformation was finally approved in November 1988. The company was also renamed as Vanke Co., Ltd., with Wang being the chairman and general manager. He started his business by trading, so he knew deeply about various ways of doing business in the early stage of reform and opening up, such as building a relationship, getting official approval, using policy and legal gaps and so on. Therefore, Wang set standardization as the core principle from the beginning of the company share reform. He bet that China would become more and more standardized after entering the market economy. He wanted to make Vanke the most regulated enterprise in China.189 Wang led Vanke into real estate development in 1988, and Vanke became one of the leading enterprises in China’s real estate industry. Wang resigned as general manager in 1999 after Vanke entered a stable development stage, no longer participating in the daily management of the company. He kept his leadership as chairman of the board until 2017, when he officially resigned as chairman of Vanke.

Professor Peng Jianfeng of Renmin University of China once summed up the characteristics of the first generation of entrepreneurs in China’s economic reform, including outstanding, charming and unyielding personality, extraordinary learning ability and market insight, high adversity EQ, innovative and risk-taking mindset, being familiar with the political system and confident in dealing with complex relationships, etc.190 This was a pertinent conclusion. The first generation of entrepreneurs, such as Huawei’s Renzhengfei (任正非), Lenovo’s Liu Chuanzhi (柳传志), Haier’s Zhang Ruimin (张瑞敏), and Wahaha’s Zong Qinghou (宗庆后), all have such characteristics. They also have their own distinctive features, which exactly made their respective enterprises different. Wang’s difference was that he abandoned holding shares from the beginning of the shareholding reform, giving up being a boss, but becoming a professional manager. At the age of 48 in 1999, he resigned as general manager in his prime, leaving opportunity for young successors because he believed that an excellent

189 Ibid., 55. 190 For more information, see http://www.sohu.com/a/284909445_761946 (access on 17/2/2019). 77 enterprise was not sustained by individual ability or charm, but by norms and systems. He firmly insisted on making the most regulated and transparent company and proclaimed that he and Vanke never paid bribes. “Greatness is managing yourself, not leading others”,191 which was a high evaluation of Wang.

However, the public always have different opinions on celebrities. On the Internet, there were many doubts about Wang on the grounds that he started his business relying on his father-in-law’s official circles; he did not really give up his equity; he was carried up to Mount Everest, and so on. It is difficult to judge the authenticity of these voices, but these are not the focus of this thesis. By looking at the achievements of Vanke in these years, I believe that Wang’s unique personality, capability and business management strategy were key factors to lay a solid foundation for Vanke’s development. What Wang brought to Vanke were as following: choosing the real estate industry; establishing a modern enterprise system; building a team; creating a brand.192 Wang Shi confirmed Schumpeter's argument that entrepreneurs played a key role in the development of enterprises, but Wang himself believed that the long-term development of Vanke lay in the team and system, not in the prestige or charm of individuals.193

3.3.2 Vanke’s development

Development of Vanke began after the share reform. On November 21, 1988, SMPG approved the shareholding reform plan, and the Shenzhen Branch of the People’s Bank of China approved the issuance of Vanke stock, which was publicly released on December 28, 1988. On March 8, 1989, the “Report on Equity Verification of Shenzhen Vanke Enterprise Co., Ltd.”, issued by Shekou Zhonghua Certified Public Accountants showed that, as of October 31, 1988, Vanke’s predecessor, the Modern Enterprise Co., Ltd. had net assets of 13,246,680.17 yuan. Together with 28 million raised by issuing shares, the total capital of 41,246,680.17 yuan was the base for Vanke to restart. At that time, Vanke had five wholly-owned subsidiaries, whose main business was import & export trade and industrial and commercial investment, including three processing plants and seven industrial investment projects (including a real estate investment).194 At this stage, Vanke was taking a development path of diversification and cross- regional expansion. Its goal, proposed in 1991, was a “Zaibatsu” (comprehensive commercial association) learned from Japan, which was a super-large company with commerce and trade as the leading factors and taking into account various operations such as finance, manufacturing, and transportation.

There was a general disdain for commerce in Chinese tradition, that was "exalting agriculture and disparaging commerce" in the past, and " exalting industry and

191 Lun Feng. Barbaric Growth. (Beijing: CITIC Press, 2007), 356. 192 Shi Wang. My Change: 40 Years of Personal Modernization. (Beijing: Joint Publishing, 2019), 68. 193 Ibid. 67, 73. 194 Details see The Prospectus of Vanke Co., Ltd http://quotes.money.163.com/f10/ggmx_000002_176904_1.html (access on 18/2/2019). 78 disparaging commerce " after the founding of the PRC. Therefore, Wang believed that the long-suppressed commerce should be the most promising field in the economic reform. Vanke was involved in four major fields: trade, industry, real estate, and cultural communication, refining into ten industries: import & export, retail, real estate, investment (including securities), film & television, advertising, beverages, printing, mechanical processing, and electrical engineering.195 Wang himself once said that except for business in pornography, gambling, drugs, and arms, Vanke did all kinds of profitable business at that time.196 The early stage of Vanke represented the business model of most Shenzhen enterprises at the beginning of the economic reform. It was an era of opportunism. The market economy was just starting, with demand and opportunities everywhere, and attractive profits. As long as a certain amount of funds was raised and certain contacts were built, almost every industry could earn money. Most enterprises were developing in a diversified way, seizing every chance and doing what was thought profitable. The result was that most people could not help themselves with immediate interests and would not consider the long-term development plans of their companies.

On November 18, 1988, Vanke obtained a residential land plot numbered H201-3 at a high price of 20 million yuan through auction.197 A month later, it took another parcel in the auction, and from then on Vanke had entered the real estate development field. However, in view of the situation of “group separation” of early Shenzhen, private developers were not easy to survive. Although Vanke developed two projects, Tianjing Garden and Weideng Villa, and achieved sales success and market praise, “Vanke had not been yet recognized as an authentic real estate company in Shenzhen”.198 Therefore, Vanke began to walk out of Shenzhen in 1991 and developed real estate business in twelve cities along the eastern coast, including Shanghai (上海), Tianjin (天津), Qingdao (青岛) and Xiamen (厦门). Vanke launched the Shanghai Vanke City Garden in 1992, which was the first large-scale suburban community of Vanke, integrating residence, commerce, education, entertainment, and leisure. The success of Shanghai City Garden became the beginning of Vanke’s focus on the development of housing and large-scale suburban communities.

After Deng Xiaoping’s southern tour in 1992, there was a situation of overheated economic development and a serious real estate bubble, the central government implemented macroeconomic regulations and made real estate development cool down suddenly, causing a capital fracture in many companies. After several years of business and geographical expansion, Vanke had 55 subsidiaries and joint companies in 12 cities. Vanke was under tremendous pressure in terms of capital and human

195 See Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 71. 196 Lu Xinzhi. Vanke Battle (Chengdu: Southwest University of Finance and Economics Press, 2017), 74. 197 Clause 6.9 of The Prospectus of Vanke Co., Ltd. 198 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 82. 79 resources. Fortunately, as the earliest listed real estate company, Vanke's A-shares199 were listed for two additional issues in 1991 and 1992. In 1991, its total equity increased by 77,965,556 shares, with a par value of 1.00 yuan per share, then its paid- up equity was equivalent to 77,965,556.20 yuan.200 With the additional issuance of 92,364,611 shares in 1992, its paid-up equity was equivalent to 92,364,611.40 yuan.201 In 1993, Vanke successfully issued B-shares, raising 450 million Hong Kong dollars.202 Funds raised on the stock market saved Vanke from its funding shortage. Although Vanke survived the government’s macro-level intervention, it paid a high price and learned many lessons, which made Wang and Vanke rethink and adjust the company’s development strategy. Vanke began to shrink other businesses from 1993 and established the dominant position of real estate development in the company. Vanke believed that urban housing was a market with great potential, and decided to take the mid-range and medium-to-high-end urban housing as the leading development direction. In fact, the investment in urban housing projects had already accounted for 52.5% of the total investment in the Group’s real estate projects under construction.203 In the second half of 1995, Vanke decided to return to Shenzhen and adjusted the strategy of blooming everywhere to focus on four major cities of Shenzhen, Shanghai, Beijing, and Tianjin, of which Shenzhen was the key target. Vanke raised 382.54 million yuan through the additional issuance of A-shares and B-shares in 1997, mainly investing in real estate projects and land reserves in Shenzhen. 204 The sale of Vanguard 205 in 2001 signalled that Vanke finally embarked on the road of specialization in real estate development after a long eight-year adjustment.

According to Wang, Vanke’s first decade (1984-1993) solved the problem of survival and attempted diversified development. The second decade (1994-2003) was to rationalize the structure of the firm and carry out the specialization in the development of urban housing. In the third decade, Vanke carried out the second specialization development, that was refinement, being more professional and more excellent in focusing on the housing sector. To improve product quality and achieve scale development, Vanke proposed the industrialization of residential buildings, and put forward the concept of “making a house like making a car”.206 Because of China’s

199 A-shares, or common stock, are issued by domestic companies for subscription and trading in Renminbi by domestic institutions, organizations or individuals (from April 1, 2013, residents of Hong Kong, Macao and Taiwan were able to open A-share accounts). The official name of B-shares is Renminbi special stock. It is denominated in Renminbi, subscribed and traded in foreign currencies and traded on the stock exchanges in China (Shanghai and Shenzhen). The registered and listed places of B-share companies are both in mainland China. 200 See Vanke Co., Ltd. Vanke Annual Report 1991. 201 See Vanke Co., Ltd. Vanke Annual Report 1992. 202 See Vanke Co., Ltd. Vanke Annual Report 1993. 203 Ibid. 204 See Vanke Co., Ltd. Vanke Annual Report 1997. 205 Vanguard (万佳) was founded by Vanke in 1991 and was a traditional department store. In 1994, Vanguard completed the shareholding reform and Vanke held 60% of the shares. It was transformed into a warehouse-style department store and quickly became the leading enterprise in Shenzhen’s retail industry. In 2001, Vanke sold all 72% Vanguard shares to China Resources (Holding) Co., Ltd. (华润集 团), ending its retail business, and focused on the specialization development in real estate. 206 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 257,258,272. 80 housing reform and the support from local governments for real estate development, Vanke made a great leap forward in the specialization of the development of real estate, achieving 10 billion business income in 2005. In the Vanke Ten-year Plan put forward in 2004, it was planned to achieve 100 billion income in 2014. The target was reached earlier in 2012, and it approached 200 billion by 2015 and nearly 250 billion by 2017. (details see table 3.4 and figure 3.7). This was Vanke’s achievement in operation and management, policy response, housing R&D and property management, which are discussed separately in the following sections.

In 2014, when Vanke entered its fourth decade, it was deeply aware that “the world around us was undergoing tremendous changes and the mobile internet was subverting the rules of the entire business society”.207 To reflect on this development in the new decade, Vanke selected 27 economies as examples in the world to conduct a study on the 40-year history of the development of real estate value. In combination with China’s current situation, Vanke believed that the outlook of China’s real estate development was still relatively positive, but the era of the high-speed rise in housing prices and the rapid expansion of the overall scale of the industry had come to an end. Vanke needed to investigate new business models to maintain future growth. Based on the above analysis, Vanke proposed that the direction of the next decade would be “three good residences” + “city supporting service provider”. “Three good residences” referred to good housing, good service, and good community. It was to update the definition and standard of high-quality residential experience constantly, to safeguard and expand the advantages of Vanke’s residential brand. The expression of “city supporting service provider” was rather vague, which referred to the emerging real estate business which was different from traditional business and conformed to the trend of the mobile internet era, and the extended business which was related to Vanke’s customer resources, housing technology, and credit advantages. 208 In practice, Vanke’s new business included commercial real estate, logistics real estate, ski resorts, education, long-term rental apartments, and retirement service.209 In July 2015, Vanke’s equity contest took place, which caused Vanke’s management to encounter an unprecedented crisis. The contention for the capital market is beyond the scope of this thesis, and is not discussed here. Eventually, Shenzhen Metro Group became the largest shareholder of Vanke in 2017, and Wang no longer served as the chairman of the board. Vanke’s 33-year Wang Shi era was over.

What would be the future direction of Vanke? In the Annual Report of 2017, it was pointed out that Vanke's positioning of "city supporting service provider" in 2014 further evolved into "urban and rural construction and life service providers", which was refined into four roles: a creator for better way of life, a major player for entity economy, a pilot of innovative exploration, and a builder of harmonious ecology. 210 The positioning and wording, which were close to the government discourse, were no

207 See Vanke Co., Ltd. Vanke Annual Report 2014. 208 Ibid. 209 See Vanke Co., Ltd. Vanke Annual Report 2015. 210 See Vanke Co., Ltd. Vanke Annual Report 2017. 81 longer Wang Shi-style phraseology, suggesting that the Wang Shi era of Vanke was gone forever.

Table 3.4 Vanke financial data (1990~2017) business income net profit net profit year income (100 year-on-year year-on-year (100 million) growth (%) growth (%) million) 1990 2.18 0.18 1991 4.23 94.04 0.26 44.44 1992 6.61 56.26 0.66 153.85 1993 10.84 63.99 1.53 131.82 1994 12.28 13.28 1.73 13.01 1995 15.04 22.48 1.47 -14.95 1996 11.78 -21.68 1.5 1.5 1997 19.48 65.36 1.87 24.67 1998 22.69 16.48 2.02 8.02 1999 29.12 28.34 2.29 13.37 2000 38.73 33 3.01 31.44 2001 44.55 15.03 3.74 24.25 2002 45.74 2.67 3.83 2.41 2003 63.8 39.48 5.42 41.51 2004 76.67 20.17 8.78 61.99 2005 105.59 37.72 13.65 55.47 2006 178.48 69.7 21.55 70.17 2007 355.27 98.27 48.44 110.81 2008 409.92 15.38 40.33 -16.74 2009 488.81 19.25 53.3 32.15 2010 507.14 3.75 72.83 36.65 2011 717.83 41.54 96.25 32.15 2012 1031.16 43.65 125.51 30.4 2013 1354.19 31.33 151.19 20.46 2014 1463.88 8.1 157.45 4.15 2015 1955.49 33.58 181.19 15.08 2016 2404.77 22.98 210.23 16.02 2017 2428.97 1.01 280.52 33.44 Source: Vanke Annual Report (1990~2017).

Figure 3.7 Vanke business income (1990~2017)

82

business income (100 million) 3000

2428.97 2500 1955.49 2000 1463.88 1500 1031.16 1000 507.14 500 105.59 10.84

0

1994 2011 1991 1992 1993 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 1990 Notes: bar chart based on the number of table2.4.

3.3.3 Vanke’s Management Philosophy and Corporate Culture

Although Wang left Vanke, Vanke’s company management system and corporate culture established by Wang have taken root in Vanke. They have played an indispensable role in the past and certainly have a profound impact on the present and the future.

Wang believed that the modern enterprise system was a product of Western culture, religion, and civilization. Before he set up Vanke, he thought if he managed a company, he would do it according to the humanist concepts and ways of the West.211 Vanke adopted the western management, and Wang believed that system and teamwork were its fundamentals. To build a sustainable system, Wang created ‘Vanke Hua’ (万 科化), that included professionalization, standardization, and transparency.212

In the early stage of China’s reform and opening up, when everything was broken and remained to be built, the business integrity environment was particularly weak. It was not easy for Wang and Vanke to adhere to the ideas and values established at the beginning of the company and achieve success. Wang wrote in Vanke’s 20-year summary and the prospects for the next ten years: “Looking back on the 20-year development course, Vanke was most proud of holding the bottom line of professionalization while the industry was not yet mature. In the face of any temptation of interests, Vanke had always adhered to its values and chose a simple, transparent, standardized and modest model of the practice”.213 Simplicity, the most important, meant the simple personal relationship. Wang did not arrange any his classmates,

211 Tsui, Anne S., Zhang Yingying, Chen Xiaoping, ed. Leadership of Chinese Private Enterprises, Insights and Interviews. (London: Palgrave Macmillan UK, 2017), 242,243. 212 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 194. 213 See Vanke Co., Ltd. Vanke Annual Report 2004. 83 close friends and families to work in Vanke, and neither did Yu Liang.214 This was precisely the most common phenomenon in Chinese enterprises that when a person succeeded, there were always relatives and friends to seek help. Many people were willing to use their acquaintances whom they believed they could trust and control, which could easily undermine the environment of fairness and mutual trust within the company. Simplicity also meant the simple way of working, that the only important thing for an employee was to do the job well. Transparency meant nothing was hidden. An enterprise without secrets was the one with the lowest institutional cost. Transparency required norms, which meant honesty and trustworthiness that Wang believed were the cornerstone of commercial society. Modesty referred to the pursuit of fair returns rather than excessive profit. Vanke believed that the competition between companies was not a sprint but a long-distance race. The fair return was the key to long-term success.215

The core value of Vanke was summarized as to create a healthy and prosperous life, which meant making customers proud by continuous providing of products and services beyond customers’ expectations, keeping investors satisfied by delivering returns exceeding investors’ expectations, and making employees proud through the continuous provision of development opportunities and remuneration beyond employees’ expectations. 216 This core value was expressed in four aspects: customers were always our partners; employees were the assets of Vanke; a sunlit system; sustained growth and leadership, which was printed on the back of every employee’s card.217 Vanke's values were deeply recognized by Vanke employees and praised by the outsiders. Its corresponding management methods were always reflected in Vanke's response to government policies, product research, and customer service.

3.4 Vanke’s Strategy for Government Policies

In the tripartite competing relationship of the government, developers, and buyers, the government is in charge of a series of important factors such as land, bank funds, housing policy, urban planning, development approval and so on. If the developer’s strategy runs counter to the government’s policy, it is undoubtedly suicidal behavior. But when it came to competing with the government, each developer had its own approach. The first one was rent-seeking. Developers gained convenience in obtaining land, project approval, and bank loans by satisfying several government officials,

214 Yu Liang, born in 1965, is the successor of Wang Shi. He graduated from Peking University in 1988, and joined Vanke in 1990. He was appointed as the General Manager in 2001, and is now the president and CEO of Vanke. 215 See Vanke Co., Ltd. Vanke Annual Report 2004; Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 288; Anne S. Tsui, Yingying Zhang, Xiaoping Chen, ed. Leadership of Chinese Private Enterprises, Insights and Interviews. (London: Palgrave Macmillan UK, 2017), 249,250. 216 Vanke Weekly ed. Vanke: Viewpoint on Corporation Management (Guangzhou: Huacheng Press, 2004), 313. 217 Anne S. Tsui , Yingying Zhang, Xiaoping Chen, ed. Leadership of Chinese Private Enterprises, Insights and Interviews. (London: Palgrave Macmillan UK, 2017), 250. 84 namely, obtained development resources by offering a bribe. The rent-seeking practice was popular especially in the early stage of the economic reform and did not stop despite repeated prohibition since then. Many corruption cases involved land and real estate development. For example, Wang Ju’s corruption, mentioned in the previous chapter, involved the project of Shenzhen Windsor Plaza, which caused the government to lose more than 100 million in land fees, and also caused owners’ economic losses, who paid in advance. Another corruption case, Xu Zongheng218, a former mayor of Shenzhen, was also involved in several land transaction, including the No.9 of Mangrove Bay plot obtained by Shenzhen Liantai Real Estate Company, and the regeneration project of Gangxia urban town. Although rent-seeking meant that was easier to obtain land and funds and earned a high return as well, the risk of illegal operation was extremely high. In recent years, with the strengthening of anti-corruption efforts in China, the government’s investigation measures and the people’s supervision have been strengthened, and the scope of rent-seeking has become smaller and smaller.

The second approach was the practice of the state-owned real estate company. The early development of Shenzhen benefited from the support of various ministries and commissions. Companies like the China Merchants, OCT, and Zhonghang, acquired a large amount of land at a very low price at one time. At the same time, of course, they also assumed many functions of the government within their land boundary, building and managing public facilities such as roads, schools, and hospitals. They enjoyed a high degree of autonomy inside their domains. When they stepped out of their territory and developed in other regions of Shenzhen or other cities throughout the country, they also needed to compete with the local government. There was no doubt that their state-owned background allowed them to have more resources and initiatives in the game with the local government. Especially in the third and fourth-tier cities, they were popular and gained favors from local government, thus, they could have better chances to get better development conditions.

The third means was short-term opportunism. This kind of developer did not take real estate development as a long-term business of the enterprises. They set up a real estate project company because of an opportunity to obtain land and funds. Their only goal was to make a profit on this project. Thus they did not focus on the long-term policy trend, nor the property management after the project delivery. When the real estate industry turned prosperous, the number of developers suddenly increased, most of which was this kind of company. Some companies seized the opportunity to make a huge profit, but after the delivery, there was no perfect property management follow- up, which made the residents’ living experience poor and led to the property

218 Xu Zongheng, born in 1955, graduated from University of China Political Science and Law. He worked in the Organizational Department of SMPG in 1993 and served as Deputy Secretary and Mayor of SMPC from June 2005 to June 2009. In June 2009, Xu Zongheng was investigated on suspicion of serious violation of discipline. On May 9, 2011, the Intermediate People's Court of Zhengzhou City, Henan Province, made a judgment of first instance, found Xu Zongheng guilty of bribery and sentenced him to death with a two-year suspension of execution. 85 devaluation. However, some development failures were entirely due to the developer’s lack of abilities to cope with the sudden shift of policies. In 1993, a large number of abandoned sites appearing in Hainan and Beihai were caused by such opportunists. These practices resulted in many land problems and a huge backlog of funds, and also caused losses to the buyers. A certain number of abandoned sites in a city not only damaged the urban landscape but also made people lose confidence in urban development.

The fourth method was deception, which was particularly prominent in the rushed construction of urban villages, as mentioned in chapter two. Shenzhen villagers rushed to build illegally regardless of policies and regulations to obtain more area for rent or more compensation for demolition. They bet on not being discovered, and the government would not punish the public after discovery. This competition ended in a compromise of the Shenzhen government. In addition to urban villages, some illegal buildings were built by deception, often involving the cover-up of some officials, which, in fact, was a way of rent-seeking. These buildings did not conform to planning and building regulations, causing potential safety hazards and impacts on the daily operation of the city, and seriously wasted public resources as all districts of Shenzhen set up a special department to investigate and deal with illegal buildings, which also indicated the universality and seriousness of these problems.

After completing the shareholding system reform, Wang emphasized Vanke’s normativeness and transparency. He declared that he and Vanke never paid bribes. Vanke did not belong to any of the above types. Moreover, Wang and Vanke were recognized by the industry as “the good children of the government”,219 which meant that Vanke’s operation was always following the government policies, and even endorsed some government control policies. So, how did Vanke deal with the prevailing rent-seeking requirements and how to respond to government policies and regulations?

Wang divided the enterprises of SSEZ into three categories according to different development stages: policy type, market-policy type, and market-creativity type. The policy-oriented enterprises were omnipotent enterprises developed in the early 1980s relying on the preferential policies of the SSEZ. They mainly referred to the companies established by the Shenzhen government, for instance, the original parent company of Vanke, the SSEZ Development Company. The market-policy type was an enterprise that developed in the mid-1980s to find market opportunities in the policy. The market- creativity type was the one that started to develop in the market by its originality and capacity in the 1990s.220

Vanke was a market-policy company, which competed and grew in the market, but

219 Hongyan Cai. Criticism on Vanke: Reflections on China’s Real Estate Development (Beijing: China Development Publishing House, 2009), 210. 220 Shi Wang. Enterprise Investment Strategy in Transition Period. Vanke Weekly ed. Vanke: Viewpoint about the Real Estate (Guangzhou: Huacheng Press, 2004), 89. 86 depended much on policies. After undergoing the macro-control in 1993, Vanke reflected on its blind expansion in the first decade and realized that the real estate industry had strong policy sensitivity. Because real estate projects lasted a long time, they were highly vulnerable to the impact of policies and regulations. Therefore, only a full understanding of the market situation and policy trends was conducive to grasping the opportunities. 221 But at the same time, Wang also suggested that developers should not over-consider policy factors, but should pay more attention to their professional competence.222 These two arguments seemed to be contradictory. In fact, Vanke did not ignore policy factors, it just did not solve problems through rent- seeking, deception, and other illegal means, but instead improved its professional capacity to cope with policy changes and external adverse factors. Wang believed that everyone had both the devil side and the angel side. Thus, officials accepted bribes, and at the same time, they pursued honor. Vanke insisted not to bribe, but to do projects professionally, contributing to the development of the city, and the performance of local officials as well. In the long run, those officials would also support Vanke as they hoped to link with the reputation of no bribery.223

Vanke’s initial involvement in real estate was an opportunistic manifestation. The high return of real estate made Vanke experience a round of blind expansion. Vanke embarked on the path of professional development after constant mistakes, reflection, and adjustment. Vanke founded Shenzhen Wanchuang (万创) in 1994, an institution specializing in residential design research. In 1999, Vanke Architectural Research Center was established, relying on professional expertise to conduct thorough research on social change, policy orientation, industry trends, and new housing technology. On the surface, Vanke could always follow the government’s policies in its development. In fact, Vanke carried out market prediction based on professional research and made countermeasures and major decisions in advance. Moreover, when companies were professional and sufficiently strong, they would stand in policy discourse to affect government regulations and urban development potentially.

Although Shenzhen had conducted its first land auction at the end of 1987, it was only an attempt at land reform. Most of the land was sold by direct agreement, while the real estate development license was only granted to construction companies and companies recognized by the government. In general, as a trading company, Vanke could not get land through agreement unless it became a “government-recognized company” through rent-seeking. The land auction was the only way to obtain the qualification of real estate development. Due to lack of experience in real estate and calculation errors, Vanke spent 20 million yuan to obtain a residential landplot No.H201-3 with only 4,141 square meters in the second land auction of Shenzhen in November 1988. Compared with the first land auction in 1987, which cost 5.25 million for 8,588 square meters, the first land parcel of Vanke came at a sky-high price.

221 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 122. 222 Ibid., 152. 223 Shi Wang. My Change: 40 Years of Personal Modernization. (Beijing: Joint Publishing, 2019), 190. 87

According to the buildable area of 10,600 square meters, the land price per square meter of floor area reached nearly 2,000 yuan, which was higher than the sale price per square meter of floor area around that region in the market at that time. Many people, including Vanke insiders, advised Wang to pay a fine for breach of contract. But in order to enter the real estate industry, Wang insisted on keeping the land and even obtained another parcel of land also by auction in December of the same year. Development on high-priced land could only be rewarded by selling at a high housing price. Therefore, Vanke attempted to win the market and customers through careful planning and product positioning, good design in architecture, innovative marketing, and high-quality property management (These are discussed in the following section).

The difficulties of land acquisition in Shenzhen, such as high land price and various negative factors for development, made Vanke redouble its efforts to survive. They were committed to studying the market and cultivating Vanke’s product series, to improving the competitiveness of Vanke products through planning, design and environment building, at the same time, to striving to improve and upgrade Vanke property management continuously. Unfavorable conditions forced Vanke to struggle and develop an elite team of development, design, market, and property management. In 1991, Vanke’s difficult situation in Shenzhen also prompted it to carry out cross- regional development and preemptively occupy markets in Shanghai, Tianjin and so on. Vanke’s experience proved that it was a feasible way to deal with external disadvantages through professional creativity. Vanke’s professional team also devoted itself to the study of government policy and urban master planning to discover the urban development laws and process for decision-making on the development sequence of Vanke’s projects. With the gradual standardization of market economy, Vanke’s professional operation gradually became its advantage for success.

“As Shenzhen entered the real estate sector ahead of other cities, it would be the first city to complete the market adjustment, and its housing demand grew steadily because of the steady economic development”.224 In 1995, Vanke made the decision to return to the Shenzhen market and listed Shenzhen as a key development city. Vanke had decided to take real estate development as its leading business and developed Shanghai City Garden successfully. It copied this experience in projects in Beijing and Shenyang, initially forming a series of products of “City Garden”. But at that time, Vanke still had some blindness and opportunistic approach in land reserve and project selection. After returning to Shenzhen, Vanke missed some development opportunities because of the lack of understanding of Shenzhen’s urban development rules and urban master planning. Shenzhen’s urban development was different from the traditional “single center” structure of Beijing and Shanghai, taking the form of “clusters in a belt shape” structure. Each cluster developed a center based on different industries and features, which was the result of the geographical features and economic development of Shenzhen city. The flow or accumulation of population and resources was determined by industry division and regional interests. According to

224 See Vanke Co., Ltd. Vanke Annual Report 1995. 88 urban planning and the demands in economic development, new group centers appeared in turn, Luohu (罗湖) first, then Futian (福田) and Nanshan (南山), then Bao’an (宝安) and Longgang (龙岗), and finally Yantian (盐田). The two parcels Vanke acquired in 1988 were in the only developed Luohu District at that time, which was the inevitable choice. However, when Vanke returned to Shenzhen at the end of 1995, Shenzhen's urban development was no longer the same. In the urban master planning of 1986, the Futian Central District was designated as the urban financial, commercial and cultural center of Shenzhen. The Futian CBD planning also carried out several rounds of planning competitions and demonstrations from 1990, and the infrastructure construction began in 1997. Relying on Shenzhen University, Shenzhen High-tech Industrial Park commenced construction in Nanshan District in 1996. At the same time, the planning and construction of Binhai Avenue in 1996-1997 expanded Shenzhen rapidly to Nanshan and Bao’an district. Shenzhen had begun to take on the form of multi-center urban development. However, Vanke still stuck to the mature Luohu. With relatively high land prices, Vanke developed projects of Vanke Guiyuan, Caiyuan, and Junyuan in Luohu District. Therefore, Vanke missed the opportunity to enter Nanshan and Bao’an at a low cost, and did not leave any of Vanke’s works in Futian central area either.

It was not until 1998 when Vanke obtained the land of “Vanke Wonderland” (四季花城) in Longgang District outside the Second Line with a little reluctance, Vanke, besides focusing on housing itself, began to study purposively the relationship between the project and the urban development, including the connection between internal circulation and urban transportation, the integration of community public facilities and urban functions, and the connection of community open space and urban space. The success of Wonderland made Vanke realize the importance of studying urban planning and development to grasp the opportunities in advance. In the urban master planning of 1996, Shenzhen city was planned to expand to the outside of Second Line, in which, the central development axis from Futian CBD to Banxuegang (坂雪岗) area (part of Longgang District) and the successive settlements of Huawei and Foxconn in Bantian (坂田) area attracted Vanke’s attention. Vanke seized the best opportunity to enter Longgang District, and successively obtained land for projects of Wonderland phase 5-7, Vanke City, and the Fifth Garden, reaching a land reserve of 95 hectares (see diagram 3.1). Vanke also realized the scarcity and non-replicability of high-quality natural resources in the city. Therefore, Vanke acquired the project land of the Eastern Coast and the 17 Miles, with the area of around 33 hectares, before the eastern Yantian District exploited its tourism industry vigorously.

Vanke carried out in-depth research on the development of these large-scale projects in terms of planning, transportation, architectural form, open space, public facilities and so on, focusing on the integration with the city, and proposed the concept of the “open community”. The successive launches of these projects not only were sought after by buyers, winning a high reputation in the market but also being cases for industry counterparts’ visiting and learning (see picture 3.2-3.5). More importantly, these

89 projects played a more significant role in promoting Shenzhen’s 1996 edition of urban master planning, that was, the expansion of urban space to outside the Second Line. Before the completion of Vanke projects, the Banxuegang area was large-scale urban villages, which meant low-quality housing, poor living environment, and potential safety hazards, and not helpful for attracting high-tech talents. Most of Huawei’s employees chose to settle their families inside the Second Line, mainly in Nanshan and Futian. Huawei had to provide shuttle services to its employees, increasing operating costs and time cost, and adding pressure on urban transportation. Vanke’s projects provided high-quality and affordable housing for the high-tech parks of Bantian area, as well as public facilities serving people’s daily life. Vanke contributed to the development of Bantian area as it helped Bantian gain popularity and enhanced the area’s appearance and regional value. More real estate companies and other industries were attracted to invest in Longgang District.

The projects of the Eastern Coast and the 17 Miles were Vanke’s great success in Yantian District, which were impeccable from the quality of the buildings to the creation of living environment, as well as the full use of natural landscape resources. However, the 17 Miles once pushed Vanke to the center of public opinion. The Golden Bay Resort, which was one road away from the 17 Miles, brought a lawsuit against Longgang Branch of Shenzhen Land and Resources Bureau, because the land, which Longgang Branch granted to Vanke for commercial housing development, was part of the 154- kilometer-long Golden Coast of Shenzhen eastern area (see diagram 3.2). SMPG had forbidden any development within the area of Golden Coast since 2000. With the investigation of the court, Southern Weekend made the matter public on January 8, 2004, immediately causing a public outcry. The project’s ultra-low land price and violation of government protection regulations plunged Vanke, which always advertised itself as against bribery, into a huge crisis of confidence. Vanke provided the contract for cooperation with other companies, as well as the "Real Estate Certificate", "Construction Land Planning Permit" and "Construction Engineering Construction Permit" issued by the government in 2002, which showed Vanke was legal in both procedure and documents. Although evidence proved that Vanke did not directly offer a bribe, public opinion believed Vanke did enjoy the results of bribery. In addition, developing a section of public coastline into a private beach for a small number of people, Vanke did not coordinate the relationship with the city as a whole, nor did it take into account the fairness of enjoying public resources, which damaged the good public image of Vanke. Because Vanke did not violate the law, the matter finally disappeared and faded out of people’s sight. None of Wang and Vanke’s publications mentioned this matter. It is difficult to work out any details now. Upon limited information, I could not presume that Vanke played a specific role in this matter. However, the incident demonstrated the chaos of management in Shenzhen’s urban development and the irregularity of developers’ operations at that time. The fact that 17 Miles permanently cut off the coastline of Shenzhen's Golden Coast indicated that any developer or project would have more or less an impact on urban development and people's lives. Whether the impact was positive or negative, it required real estate

90 companies to control their operations, and more importantly, the government needed to establish an effective supervision and management mechanism.

Diagram 3.1 Vanke’s projects in Bantian area, Longgang District, Shenzhen

Source: diagram drew based on Shenzhen map.

Diagram 3.2 Vanke 17 Miles in Yantian District, Shenzhen

91

Source: diagram drew based on Shenzhen map.

Photo 3.2 Vanke Wonderland, Longgang District, Shenzhen

Source: taken from the field research in Vanke Wonderland Shenzhen, 12/12/2018.

Photo 3.3 Vanke the Fifth Garden, Longgang District, Shenzhen

Source: Hong Kong Science and Information International Publishing Co., Ltd. ed. Poetic Dwelling: Vanke’s House (Wuhan: Huazhong University of Science and Technology Press, 2007).

Photo 3.4 Model rooms of Vanke the Fifth Garden

92

Source: Hong Kong Science and Information International Publishing Co., Ltd. ed. Poetic Dwelling: Vanke’s House (Wuhan: Huazhong University of Science and Technology Press, 2007).

Photo 3.5 Vanke East Coast, Yantian District, Shenzhen

Source: Hong Kong Science and Information International Publishing Co., Ltd. ed. Poetic Dwelling: Vanke’s House (Wuhan: Huazhong University of Science and Technology Press, 2007).

Through the study of the trend of urban planning and development, Vanke gradually changed from an ignorant opportunist who took land blindly to an active player who mastered the law of urban development. At the same time, Vanke learned how to coordinate and influence the urban development process. As for the housing policies

93 issued continuously by both the central government and local governments, Vanke generally adopted a positive attitude to rapidly adjust its development strategy. Based on the prediction of industry development, Vanke could start some new development strategies and measures in advance. In fact, Vanke learned these experiences from trial and error. In Vanke’s real estate business in 1993, office projects accounted for 75%, and housing only accounted for 25%. Macro-control caused Vanke’s high-rise office projects in Tianjin, Wuhan, and Shenzhen to shut down and show signs of failure. Vanke took rectification measures to change buildings’ function. Only the Haishen project in Shenzhen was successfully transformed into a high-rise residential project, Vanke Junyuan, and avoided losing money. Tianjin and Wuhan projects were caught in long-term losses and buyers’ lawsuits. They were not completely solved until 2005, and Vanke certainly paid high costs.

After the abolition of the welfare housing system in 1998, Vanke believed that commercial housing would be transformed from luxury consumption belonging to a few people to mass consumption of ordinary people. Based on the analysis of policy and the pre-judgment of the market, together with the expensive lessons before, Vanke firmly made ordinary housing its main business and prudently built fewer high-rise buildings. In June 2000, Vanke led the establishment of the China Real Estate Developers Collaboration Alliance, and launched the “New Housing Movement”, proposing the slogan “Towards the New Economy and Pay Attention to Ordinary People”. Wang Shi’s comment on ordinary people was: white-collar workers, blue- collar workers, freelancers, and small and medium-sized business owners, who did not enjoy political, economic and cultural privileges. This group were the mainstream consumers in the present and future housing market. This group of people comprised the majority of urban residents, and their income and consumption level were the average level of the city.225 Vanke not only advocated industry counterparts to build urban houses for ordinary people but also practiced this concept itself. Ten years later, in 2011, 88% of Vanke’s sold products were ordinary housing with floor area under 144 square meters per unit, and 53% were under 90 square meters. Moreover, 64% of Vanke products were for first home purchases and first home improvement.226

The constant rising of housing prices was the distinctive feature of China’s real estate industry. The growing gap between the rich and the poor was criticized as a by-product of real estate development. To control housing prices was one of the main reasons why the government continued to regulate housing development. The government’s macro-control was bad news in the real estate industry, always causing collective panic among developers and investors. Vanke was an enterprise that publicly welcomed the government’s regulation and control. Wang even wrote a rational treatment of government macro-control into the Vanke Annual Report in 2005 to help Vanke investors understand the significance of macro-control. He pointed out that the rapid

225 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 215. 226 Shi Wang. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 33. 94 rise in housing prices should not be considered positive for developers who were committed to long-term goals, instead, they should be highly vigilant. Real estate was a young industry in China. When the marketization was not yet mature, the government’s macro-control was conducive to the rational and healthy growth of the industry.227 Then he interpreted in detail the “Opinions on Stabilization Housing Prices” transmitted by the General Office of the State Council to seven ministries and commissions of the Central Committee in May 2005. He believed that the central government supported the real estate industry as the pillar industry of the national economy, and the control was to take into account the principles of fairness and marketization. The purpose was to make the real estate industry develop healthily. Thus, investors should eliminate uncertainties about the future of the industry.228

The fairness principle mentioned in the Opinions and the definition of ordinary housing (land saving, small size, reasonable price) made Vanke realize that when the housing prices rose year by year, many ordinary families could not afford to buy a house. Although the housing of low / middle-income people was a problem that government should solve, Vanke suggested that it was also the responsibility of real estate companies to pay attention to the housing problem of this group of people. In 2005, Vanke spent one million yuan to launch a campaign named “Conch Action” to focus on the housing for low and middle-income people, collecting nationwide solutions for urban low-income residents. Thirteen schemes from 263 candidates were selected for publication, which was submitted to the Housing and Real Estate Department of the Ministry of Construction. Inspired by the traditional housing of , Vanke developed a pilot project for urban low-income people. The Wanhui Building229 started construction in November 2006 and was put into use in May 2008. It was listed as a “pilot project for rental housing for the low-income group” by Guangdong Provincial Construction Department. This was Vanke’s first attempt at the rental apartment. Now Vanke has a special series of rental departments which is introduced below. In December 2007, Vanke and the Culture and Education Section of the British Consulate General jointly hosted the second “Conch Action”, with the theme of a comparative study on “Sino-British Resolving Housing Problems for Urban Low-income People”. The results of the activities were edited and published in the book Two Cities Notes – Sino-British Thoughts on Solving the Problem of Social Housing. The book presented the thoughts of the academic circles of the two countries on the housing problem of urban low-income people. Introducing the British housing security policy was worthwhile, and the core idea was the overall affordability of housing and sustainability of communities. Through these activities and pilot project, Vanke actively demonstrated to public opinion and the government that Vanke was willing to assume social responsibility as a corporate citizen.

227 See Vanke Co., Ltd. Vanke Annual Report 2005. 228 Ibid. 229 Referring to the Hakka traditional residential form, Wanhui Building is a six-storey circular building with a floor area of 12,000 square meters, and can accommodate up to 1800 people. The main types of rooms are small apartments of 35-40 square meters, with a monthly rent of about 450 yuan. There are also some collective dormitories with 40 square meters for six people. 95

After introducing the policy of stabilization housing prices in 2005, the central government launched the policy to adjust the structure of commercial housing products in 2006, namely the 90/70 policy.230 This policy was a heavy blow to the developers who were accustomed to developing high-end housing with a large floor area. The high-end properties were generally built on land with a good location or with beautiful natural landscape. These land prices were bound to be much higher than the land for building ordinary small-sized products. To develop small-sized housing on these lands would greatly reduce developers’ profits, or even make a loss. Because of the different buyers, small-sized housing was very different from the high-end product in architectural design and supporting public facilities. If developers had no experience in small-sized housing, they were more likely to fail. Design companies and architects were very busy in that year, and experienced many strange design requirements from developers. Some developers asked for design study of small-sized products, while others asked for working out some flexible methods, such as designing small units within 90 square meters, but after removing some walls between two small units, they could be changed to a large apartment, in which reasonable floor layout and functions were certainly required. At the same time, some local governments implemented some flexible methods to maintain land finance. For example, the method of regional balance was ‘invented’, that was, the 90/70 policy was implemented in the whole city or some designated regions instead of implemented in each land parcel, which gave many developers the disguised opportunity to develop large-sized housing. Vanke had long proposed that small and medium-sized units were the development trend of urban housing. It established a special team to study small-sized units since 2001. Vanke became the first real estate company to respond positively to the 90/70 policy, and quickly captured several “90/70” plots in Hangzhou, Shanghai, and Guangzhou while other developers were still panicking or thinking about countermeasures. This policy, which caused a headache for most developers, had instead become a boost to Vanke’s land acquisition, which also showed that Vanke’s forward-looking market research enabled it to respond quickly to this type of policy and turned its disadvantage into an advantage.

From 2004 to 2006, although the central government introduced intensive macro- control measures, in fact, the restraint of house prices was only temporary, and there was soon a retaliatory rebound. House prices were still on the rise, especially in the second half of 2006 when house prices began to jump up. The average house price in Shenzhen doubled from 6,419 yuan per square meter in 2004 to 13,370 yuan in 2007 (see table 3.3). Vanke's business income also increased fivefold from 7.667 billion in 2004 to 35.527 billion in 2007 (see table 3.4). In the land auctions of 2006 and 2007, the new records of the highest land price in every city was constantly broken, making

230 90/70 Policy meant that in 2006, nine ministries and commissions, such as the Ministry of Construction, jointly formulated the “Opinions on Adjusting the Housing Supply Structure and Stabilizing Housing Prices”. It stipulates that from June 1, 2006, the proportion of housing area under 90 square meters per unit (including affordable housing) for newly approved and newly started commercial housing construction must reach more than 70% of the total area. 96 to the rejoicing of the entire real estate industry. Vanke also participated in this carnival. In July 2007, Vanke spent 2.68 billion yuan to win a plot in Tangxia Dongguan with a starting auction price of only 640 million yuan, making it “King of Guangdong Land”. After 239 rounds of fierce competition in September 2007, Vanke won a parcel in Fuzhou with 2.72 billion yuan, making it the “King of Fuzhou Land”. The land price per square meter of floor area already reached 7,096 yuan, which was higher than the sale price per square meter of floor area around that parcel.231 The birth of every “king of the land” caused the house prices of the area to fall into madness. Many being offered for sale properties were immediately withdrew from the market and it was announced that the sales would re-open after the price adjustment. As Wang said in the Vanke Annual Report 2005, real estate companies should be highly vigilant when housing prices continued to rise. At the Vanke regular meeting in November 2007, the market report from the department of strategy and investment management showed that the real estate market in major cities, such as Shenzhen, Shanghai, and Beijing, appeared to follow a clear downward trend. Vanke felt deeply that the adjustment of the market itself was already inevitable. Thus, Wang announced in December that Vanke would no longer seek to obtain the “king of the land”. Vanke cut the new-start construction plan for 2008 by 20%, and soon lowered it again to reach 38%. Meanwhile, the management team decided to adjust the house price. On December 9, the average opening price of Guangzhou Golden Kangyuan was lower than that of the surrounding properties by 3,000-4,000 yuan per square meter, which was followed by reduced prices in all Vanke’s housing projects all over the country successively.232 Wang later responded to a reporter’s question in a media interview, saying that he agreed with the view that there was a turning point in the real estate market. Neither Wang nor Vanke management team expected that their actions of adjusting the company’s operation according to their market predictions would trigger huge reactions from the housing industry counterparts, governments, and consumers at different levels. Real estate industry counterparts believed that Vanke had become the driving force of government macro-control in an attempt to shuffle the industry in price reduction. At the government level, because of land finance, some local governments were reluctant to see land auctions fail and house prices decline. They secretly agreed to stay away from Vanke. Some cities even sent an investigation team to check Vanke’s accounts and taxes. The house price reduction should be good news for most consumers, but the buyers who bought Vanke’s products before the price decline felt deceived. They rushed to Vanke’s sales office to make trouble, smashing the sales office and even injuring some staff. Until the National Day holidays in 2008, the housing prices all over the country declined, but the market still reacted coldly. With the financial turmoil caused by the subprime mortgage crisis in the United States sweeping the world, people had to admit that Vanke’s price adjustment was based on the rational judgment of the market, and Vanke’s awakening was just a little earlier than everyone else.

When Wang’s theory of turning point had been fermenting for almost one year, Vanke’s

231 Wang Shi. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 188. 232 Ibid., 189. 97 biggest concern was the saying that some cities would stay away from Vanke. Real estate business needed to coordinate with many government departments to get their approval, such as land, planning, construction, transportation, infrastructure, taxation, sanitation, education and so on. If a real estate company was isolated by the local government, it could hardly do any development in the city. Vanke, although having earned a high position in the industry, also had to maintain its relationship with local governments carefully. In the maintenance of government relations, Vanke’s approach was not to please a major official, because Wang had always adhered to the normative and transparent operation of the company. Vanke responded positively to government policies through its business operations, thereby expressing its support for the development of a city and the work of the local government, certainly taking into account the growth of the company’s business as well.

The Wanhui Building, mentioned above, was only a pilot project for a low-rent apartment, but Vanke had seen through this pilot that rental apartments were a new business with market demand and could help alleviate the pressure of the government housing security system. Therefore, at the time of the company’s 30th anniversary in 2014, Vanke proposed that the company’s new ten-year goal was to be an urban service provider, and the added business segments included long-term rental apartments. In 2015, Vanke formed a series of apartment products, namely “Vanke Yi” (万科驿). More than 1,000 apartments were launched, and 20,000 apartments were being prepared for opening.233 On June 3, 2016, the General Office of the State Council officially launched “Opinions on Accelerating the Cultivation and Development of the Housing Rental Market”, promulgating a series of policies to encourage and standardize the housing rental market. Long-term rental apartments began to become a hot market that many developers were competing for. In May 2016, one month before the introduction of the Opinions, Vanke integrated all its long-term rental apartment products and launched a unified brand, entitled “BoYu” (泊寓). By the end of 2017, Vanke BoYu opened more than 30,000 apartments in 29 cities and already acquired more than 100,000 rooms. Vanke became the largest provider in long-term rental apartments in China, aiming to be a leading residential rental enterprise in the world.234

In the second housing reform plan of Shenzhen, it was clearly stated that the proportion of public rental housing products was 20%. Due to the scarcity of urban land in Shenzhen, how to obtain land for affordable housing construction is a great challenge. Shenzhen’s urban villages occupy about 320 square kilometers of urban land. How to effectively utilize them is the focus and difficulty of Shenzhen urban construction. Shenzhen proposed urban villages regeneration since 2004, but with the increasing cost for demolition and relocation, it was more and more difficult to use the method of demolition. The comprehensive renovation is the most practical method at the present stage. In order to cope with the development of the housing rental market, in 2018, Shenzhen proposed to collect not less than 1 million sets of self-built houses or

233 See Vanke Co., Ltd. Vanke Annual Report 2015. 234 See Vanke Co., Ltd. Vanke Annual Report 2017. 98 collective properties through acquisition, lease, and reconstruction during the 13th Five- Year Plan period, which would be put into the unified lease management system after quality and fire safety inspection.235 In addition, in the Master Plan of Shenzhen Urban Villages 2018-2025 (see photo 3.6), areas of 99 square kilometers were defined as the scope of the comprehensive renovation, that was, the scope without demolition and new construction (see photo 3.7).

Vanke launched the "Wancun Plan" (万村计划) in 2017 and established Shenzhen Wancun Development Co., Ltd. specializing in comprehensive renovation and leasing operations of urban villages, upgrading the public facilities of urban villages, and providing standardized leasing services. At the same time, Vanke signed a strategic cooperation agreement with Shenzhen RenCaiAnJu Group236 to cooperate fully in talent housing and social rental housing.237 It is the responsibility of local governments to develop and manage affordable housing. However, it is difficult for local governments to carry out large-scale advancement due to the lack of funds, human resources, and development experience. Therefore, only with the help of social capital and enterprise strength can the tasks issued by the higher-level governments be fulfilled as soon as possible. The expansion of Vanke's rental housing business fully conformed to the policies and measures of the central government and Shenzhen local government in the new round of housing system reform, and naturally received strong support from the municipal government and the district governments. This was a win- win model for Vanke to respond to government policies.

All these decisions made by Vanke were not only based on Vanke's judgment of the industry and the need for its business adjustment but also conformed to the government's policies and guidelines. Although some public opinions considered that Vanke would particularly please the government and deliberately be a "good child" of the government, no one would believe that Vanke developed to a company of this scale and level in more than 30 years simply by flattering the government.

Photo 3.6 Existing layout of urban villages Shenzhen

235 “Shenzhen Housing Rental Pilot Work Program” http://www.sz.gov.cn/cn/xxgk/zfxxgj/tzgg/201708/t20170828_8289080.htm (access on 28/2/2019) 236 Shenzhen RenCaiAnJu Group Co., Ltd. was established on June 30, 2016. It is a platform for Shenzhen Municipal Party Committee and Municipal Government to guarantee the housing for talents. It is a municipal wholly state-owned company, specially responsible for the investment, construction, and operation and management of talents housing in Shenzhen. 237 See Vanke Co., Ltd. Vanke Annual Report 2017. 99

Source: Master planning of Shenzhen Urban Village 2018-2025. http://www.szlh.gov.cn/qgbmxxgkml/csgxj/zwxx/tzgg/201811/t20181106_14465445.htm (access on 25/2/2019)

Photo 3.7 Scope of the comprehensive renovation of urban villages

Source: Master planning of Shenzhen Urban Village 2018-2025. http://www.szlh.gov.cn/qgbmxxgkml/csgxj/zwxx/tzgg/201811/t20181106_14465445.htm (access on 25/2/2019)

3.5 Vanke’s Products, Marketing, and Property Service

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Developers have to deal with governments at different levels, while they also have to face customers at the downstream level, i.e., buyers and residents. The success of developers depends on whether they can occupy the market and make profits, in short, whether their houses are sold out and their customers are satisfied. At the beginning of China’s real estate industry, most people were still solving the problem of having a house. Thus, apart from the floor area and the price, no one put forward any concerns about the architectural style, functional rationality, beautiful environment, and good maintenance and service. That was a time of a seller’s market, when buyers would accept any product provided by developers, as long as it was a house for living. With the improvement of living standards, people began to pursue quality of life and taste, naturally producing various requirements for housing which were closely related to everyday life. The real estate market changed into a buyer’s market. With the rise and popularity of the Internet, people could collect information from many sources and communicate extensively. Customers gained a complete right of choice. Therefore, to maintain market share, real estate companies’ products, marketing, and aftersales service were all about buyers. The demands and requirements of customers have become the driving force for developers to change and innovate. The interaction between developers and buyers is also a key driving force for the development of the real estate industry.

In the early days of his involvement in the real estate industry, Wang proposed that Vanke aimed to “promote a new way of life”. He suggested that from the beginning to the end, Vanke did not “take profit as its sole goal, nor did it merely provide customers with residence, but provide perfect service to satisfy people’s pursuit of the comfortable, convenient and perfect way of life”.238 Therefore, customer’s needs and satisfaction were the core goals in the entire process of Vanke’s project, from planning, design, and construction, to delivery and property services.

Being a video equipment trader, Vanke was a layman in the real estate industry at the very beginning. But a layman still had the advantage that the company was not bound by rules and regulations and dared to innovate. Huang Tieying239 argued that Wang was a rare entrepreneur who “maintained a fresh and open learning attitude towards the world”, and Vanke was “a frightening company because they never refuse to learn”.240 Vanke learned advanced market and service concepts from its early learning models, Sony Corporation, the trading partner, and Sun Hung Kai Properties, the giant of Hong Kong real estate industry. Afterward, Vanke formed its characteristics in marketing and after-sales service and established its own brand. Vanke’s first project,

238 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 82. 239 Huang Tieying (黄铁鹰), Master of Industrial Economic Management, Renmin University of China. From 1993 to 2000, he served as the general manager of China Resources Venture. Since 2001, he began to be a visiting professor at Guanghua School of Management, Peking University, teaching MBA practical case course. In 2010, he was awarded the only China Best Business Case Study Award by Harvard Business Review. He is the world's most published scholar in the Chinese edition of Harvard Business Review. 240 Xinzhi Lu. Vanke Battle (Chengdu: Southwest University of Finance and Economics Press, 2017), 65. 101

Tianjing Garden, was launched to the market with a short and confident slogan, “Tianjin Garden, Shenzhen Housing’s Tomorrow”, which demonstrated the determination and pride of a new real estate company. Tianjing Garden built the first model room in China to promote sales. Now the model room in housing sales is already a standard configuration. But at that time, it was the first time to truly present the future daily life, such as washing, cooking, eating, and sleeping, in such a space with the same size and layout, and delicate decoration before the building was completed. The buyers got a specific image of their future life in the model room, which attracted many people’s visits and led to unprecedented sales levels.

When Tianjing Garden was delivered in 1990, Vanke’s property management company was also established. Wang proposed to introduce Singapore’s model of property co- management and Sony’s awareness of after-sales service. Vanke put forward specific requirements for property management, such as no scrap of paper on the ground, no bicycle lost in the community, and plants were kept flourishing. These were strict standards in Shenzhen in 1990, and the newly established property company kept to them. Clean, safe and green communities became the basic characteristics of Vanke property management. In April 1991, Tianjing Garden set up the first owner committee in China to represent all the owners in the management of the community. It was the “highest authority”, holding a monthly meeting to discuss major issues of the community. In 1994, the property management company spent 1.5 million yuan on building a swimming pool. To cover part of the cost and daily maintenance, it was proposed to implement the membership system, with a membership fee of 20,000 yuan for each household. However, the owner’s committee objected to this proposal, arguing that the pool should serve most owners, and membership fees should be determined through public opinion polls. The result of the opinion poll was that 2,000 yuan was acceptable by most households. In taking into account the difficulties of investment and maintenance, the owner’s committee finally set the membership fee at 5,000 yuan, which satisfied both sides.241 Nearly 30 years later, Tianjing Garden today is still clean, tidy and safe (see photo 3.8).

In addition to the co-management model, Vanke property management launched a hotel-style management model to provide hotel services based on the needs of commercial & residential property customers. With the realization of intelligent buildings, Vanke tried an unattended management model to make residents feel more private. In the project of Vanke Wonderland, housekeeper’s room was designed at the entrance of each residential group to provide “old housekeeper” service. The neighborhood watch management model was introduced to make the residents feel a greater sense of belonging and warmth. The property company also set up a special customer research team to study service models for different real estate products and built a service system, that was “recognizing customers – knowing customers – helping customers – understanding customers – moving customers – achieving customers”. In 2007, Vanke Property Management Co., Ltd. changed its name to Vanke Property

241 Ibid. 184. 102

Service Co., Ltd. The difference of one word reflected the upgrade of Vanke's customer philosophy. Vanke property service company won the first place in “China’s Comprehensive Property Management Strengthen”, and more than 60% of its customers came for the brand of Vanke’s property service.242 Nowadays, Vanke has realized intelligent management in all aspects of a community, such as entrance & exit, visitors, seniors & children safety, community monitoring, parking, and equipment management like water, electricity, fire, and elevators. In 2014, Vanke launched the RUI platform (睿平台) based on mobile internet to promote the renewal and upgrading of management and service means. The RUI platform directly connected community residents and service personnel to create a better experience for customers with higher efficiency and more distinctive personalized service.

Vanke Property not only provided service but also was responsible for the building of community vitality and culture. In 2012, Vanke put forward the concept of "three good residence", that was "good houses, good services, and good neighbors". It upgraded to a new “three good” system - "good quality, good service and good community" in 2014, which further strengthened the importance of the community. After the residents moved in, the property company would help organize activities groups and regularly host community events to promote community life. Vanke obtained household feedback through third-party investigations. If the resident knew fewer than 12 neighbors, the property company was unqualified. To achieve the criteria of a good community, it was necessary for the property service team to organize activities so that the residents had more opportunities to know each other.

Photo 3.8 Tianjing Garden, Luohu District, Shenzhen

Source: taken from the field research in Vanke Tianjing Garden Shenzhen, 12/12/2018.

242 Lijuan Liu. Vanke 30 Years: Product and Marketing (Beijing: China Architecture & Building Press, 2016), 170. 103

However, it is certainly not enough for a good community to rely solely on property management. A good community must first have a good space support. Neighborhood relationship is an important factor in a good community, which takes time to build through the process of “encounter – acquaintance – familiar”. The community public space system with convenient use and pleasant scale can increase the opportunities for people living in different groups and floors to repeatedly meet in their daily life and develop into close neighborhood relations. Public spaces include community parks, corner green spaces, group green spaces, children’s playgrounds, sports area, promenades and greenbelts, bus stops, and public buildings such as shops, clubhouse, and residential lobbies. Residents are willing to use these facilities and spaces, which have reasonable layout and streamlined design, and identification system. When they meet for certain times, they can establish contact with each other. Vanke’s community space was constructed from project planning. Taking Shenzhen Vanke Wonderland as an example (see photo 3.9-3.10), the overall planning adopted the structure of “open community – gated groups”, which made mixed community possible and made the community more vigorous. In gated groups, the enclosed group layout formed a semi- open and defensible public space, which made the residents in the group feel more sense of domain and security. In such a space, together with some appropriate activity facilities, it was easy to promote the occurrence of neighborhood communication. In terms of the streamline and spatial organization, the home route and walking greenway were designed with the combination of bus stops, community commerce, clubhouse, and other facilities. These were the successful attempts of Vanke to build a vibrant community.

Photo 3.9 Plan of Vanke Wonderland

Source: diagram drawn based on the plan of Vanke Wonderland Shenzhen.

Photo 3.10 Vanke Wonderland, Longgang District, Shenzhen

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Source: taken from the field research in Vanke Wonderland Shenzhen, 12/12/2018.

In addition, Vanke paid more attention to the long-term development of the community, which referred to the long-term stage from the buyers’ residence after the completion of the sales and delivery. As part of the urban organism, the construction completion of the community is only the beginning of its growth process. Housing is a special consumer product with the characteristics of fixedness and high value. A family may live in a house for a lifetime. Even if it is for a relatively short period, it is normally at least several years or more than ten years. While living standards improve constantly and the city continues to develop and transform, if the community remains unchanged, it appears obsolescent very soon, and gradually is unable to meet people’s daily needs. When Vanke built the Shanghai City Garden, Wang put forward the idea “affordable, livable, sustainable”,243 meaning that developers could not sell their houses regardless of the dynamic development of people’s lives and the community after buyers settled down. Given a large number of complaints arose from the quality problems of planning and design and engineering construction in Wuhan Vanke Wonderland in 2001, Mo Jun put forward the viewpoint that “our work is 70 years effective”.244 Vanke began to pay attention to the long-term development of residential areas.

243 In Chinese wording is “买得起,住得进,留得下”. See Vanke Residential Planning Research Group, School of Architecture, Tsinghua University and Vanke Building Research Center. The Vanke Way: How We Think Vanke’s Perspective on Urban Community Development (Nanjing: Southeast University Press, 2004), 143. 244 Mo Jun, who joined Vanke in 1991, served as the company's executive vice president in 2001. He published "Our Work is 70 Years Effective" in the total 415 issue of Vanke Weekly in 2002. He proposed that Vanke should have a long-term concept, that was, Vanke's development in the industry was long- term, customers' consumption of Vanke's products was long-term, and Vanke's service to customers was long-term. He also believed that developers were system integrators and service providers, and in no case could the responsibility of the problem be passed on to others (designer, builder, supplier, etc.), because our houses only had Vanke brand. See Vanke Weekly ed. Vanke: Viewpoint on Corporation Management (Guangzhou: Huacheng Press, 2004), 134-135. 105

In cooperation with local , Vanke carried out a series of follow-up surveys on the problems existing in the operation of communities, which was from the perspective of both users and operators. In 2002, Vanke Architectural Research Center and School of Architecture and Civil Engineering of Shenzhen University jointly surveyed Shenzhen Vanke Wonderland. In 2003, it cooperated with the School of Architecture & Urban Planning of Shanghai Tongji University to research Shanghai City Garden. In the same year, Vanke Residential Area Research Group was formed with the School of Architecture of Tsinghua University to research 12 Vanke communities that residents had been living in for a long period. In these investigations, it was found that Shanghai City Garden left four parcels undeveloped due to some accidental factors. After ten years, these parcels solved the need of the community middle school for expansion, increased the number of parking lots and the area of green spaces, and provided the construction area in line with the needs of urban development to build a large regional supermarket. But in Shenzhen Vanke Wonderland, because there was no reserved land, it could only change the activity space on the first overhead floor into the community supermarket and parking lots, which brought new problems in the entrance & exit setting and the streamlines organization. In November 2003, Vanke carried out a survey on the surrounding environment and public facilities because of complaints from residents about noise and odor.245 Through a series of investigations, Vanke established the view of urban management and flexible planning, that was, to consider the relationship between residential areas and urban development in the early stage of project planning, as well as the growth of communities and the rational allocation of resources. Therefore, Vanke began to pay attention to the reservation of land for future development and the possibility of conversion of buildings’ functions at the planning and design stage and allocated public facilities which could serve residents for a long time, like commerce and ordinary clubhouse.

Property management and long-term community development are important, but in an instant, it is the quality of the house itself that make consumers decide to make the purchase. House quality usually includes design quality and construction quality. Design quality refers to convenient, efficient and reasonable layout, as well as structural and pipeline design safety. Construction quality refers to the use of qualified materials and construction in accordance with the design and national standards, without leakage, cracking, deformation and other problems. The government has a specific quality management department to review every stage from design to construction. The department grants developers the construction permit, the sales permit and the delivery permit upon the quality acceptance of each stage. Also, it is stipulated that developers must employ a third-party supervision company to enter the construction site to monitor daily construction quality. Quality is usually one of the important factors for consumers to decide the purchase, and to reduce after-sales complaints and maintenance, developers usually set up internal review departments

245 Vanke Residential Planning Research Group, School of Architecture, Tsinghua University and Vanke Building Research Center. The Vanke Way: How We Think Vanke’s Perspective on Urban Community Development (Nanjing: Southeast University Press, 2004), 143-146. 106 and develop strict review standards and procedures to control the quality of all links from design to construction.

The design layout is usually the first concern of the buyers. Vanke’s leading business direction was developing ordinary housing, but its products were not confined to that, contrarily, had a very rich product series. In the 20 years of development, Vanke formed four mature standardized product lines, namely, Golden series, City Garden series, Wonderland series, and Top series. The first three series were distinguished by geographical location, while the Top series was based on the possession of scarce resources. The Golden series was the residence in the urban core area, enjoying convenient transportation and fashionable urban life. The City Garden series was the community located on the edge of the city. It was a bit far from the city center, but the transportation was still convenient. The public facilities were also good, and the cost of living was lower than that of the city center. The Wonderland series was located in a suburban or a satellite town, far from the city center, and the public facilities were not perfect. It was suitable for young people who were first-time home buyers and families who wanted to purchase a second home to enjoy a leisurely life. Each series was subdivided into different types. Taking the Golden series as an example, it was subdivided into three types: service apartments for investment, apartments for people wanting to upgrade their residence, apartments for first-time buyers. Under each type, different residential areas and types of needs were separated according to family structure, consumer age, and purchasing purposes, and the proportion of each type of apartment in the project according to the market research (see table 3.5).

At the beginning of its third decade, Vanke drew on the model of Pulte Homes, which was one of the best developers in the United States, where, like China, there were vast territory and a fragmented market. The US real estate market divided customers into first-time home buyers, first-time home changes, second-time home changes, and active elderly home buyers, while Pulte Homes was the only developer in the US to offer mainstream products in all four market segments. Pulte Homes was worth learning from for Vanke in terms of cross-regional operation, land reserve mode, sustainable profitability, market share, customer segmentation, and relationship maintenance. 246 Therefore, in the ten-year long-term development plan, Vanke proposed the idea of moving from “professionalization” to “refinement” in order to achieve “quality growth”. Vanke’s operation changed from a project-centered mode to a customer value-centered mode. Under the customer segmentation strategy, Vanke was not limited to “physical” methods such as occupation, income, and age. It started from customers’ intrinsic value to establish a gradient product system according to customers’ different life cycle. It aimed to create value for customers and achieve their lifetime loyalty.247 Subsequently, Vanke developed a “full lifecycle product” to meet the needs of customers of different ages and life stage (see table 3.6).

246 Shi Wang. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 87-88. 247 See Vanke Co., Ltd. Vanke Annual Report 2004. 107

Table 3.5: the subdivision of the Golden Series Types Land Customer Customer Segmentation Main Characteristics Demand proportion Family age Purchase housing structure motivation types G1 1 dense office 1 convenient - businesspeople investment 1 room service buildings, high for business - Top investment 2/3 apartment commercial value 2 good businesspeople rooms 2 municipal quality and facilities service 3 good transportation, but with noise G2 1 convenient To improve 10% Three 35~45 improving 4 For transportation and residential generations rooms upgrading quiet quality 40% Nuclear family 40~45 improving 3 2 good facilities (with teenage) rooms 40% Nuclear family 35~39 improving 3 (with child) rooms 10% Senior couples 45~50 “empty 2 nest” rooms G3 1 dense public Low total 85% Young couples 25~35 dwelling 2 For transportation prices rooms dwelling 2 passable facilities 15% Young people 25~30 dwelling 1/2 3 medium quality rooms Source: Liu Lijuan. Vanke 30 Years: Product and Marketing (Beijing: China Architecture & Building Press, 2016), 39.

Table 3.6: Vanke full lifecycle products products subdivision series characteristic description 45m2, integrated household appliances ant workshop solution, mix use function 25m2, free conversion of three modes of single apartment MI(米) apartment residence, office and leisure, movable furniture, online sale 18m2, function mixed and shared in limited tiny apartment space reserved space for growing, high space 90+ series utilization, full furnishing solution extending the housing lifecycle, reducing the growing family happiness series pressure of changing housing, complete function in the small area freely assembled decoration house, innovations YUE(悦) series in details

108

flexible and changeable spaces, assemble RUI(睿) series furniture changeable layout, individualized assembly, UP series whole lifecycle community, entire living system Mature commerce, full-age education, scientific international series and technological wisdom, green life, intimate high-end family service, fine decoration urban core area or rare resources, celebrity jade series class, intelligent home small institution providing 24-hour care, embedded small catering, day care, health management, and institutions other seniors’ services in the newly-built community seniors housing urban seniors service self-care apartment+ nursing apartment+ complex medical supporting+ commercial facilities community-wide aging friendly facilities, whole lifecycle seniors pension apartment, pension institution, medical service community institution, seniors college, seniors restaurant Source: summarized from Liu Lijuan. Vanke 30 Years: Product and Marketing (Beijing: China Architecture & Building Press, 2016), 44-58.

In the Vanke Annual Report 2004, Vanke also planned to establish Vanke residential standards to improve housing quality and cost-effectiveness through factory production, and to carry out the research and development of possible future residential buildings with harmonious, natural and ecological standards, so as to contribute more independent intellectual property rights to the residential industry. It was not only the necessary route for Vanke to develop on a large scale but also an important measure to improve the quality of Vanke products. In the early stage of Vanke, because of the rapid cross-regional development, resulting in the financial shortage, and Vanke being originally a non-professional real estate company with insufficient expertise in construction, there were often problems of construction work needing to be re-done and delays in Vanke’s development. The quality of Vanke projects was uneven, which was the focus of complaints from customers. In the initial stage of China’s real estate development, it was a seller’s market. Because of the scarcity of products in the market, developers could sell off their plans at a rate of more than 90%. Thus, quality issues and customers’ complaints were delayed, and would not affect sales. At that time, Vanke put forward the view that “property management was Vanke’s last line of defense”248, because many construction quality problems could only be solved in the stage of property management after the delivery, which cost a lot of human resources and funds. However, after 1995, many companies invested in real estate development, and more and more commercial housing in the market. Consumers had more choices and they were more inclined to see the completed

248 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 135. 109 buildings before deciding on the purchase. All construction quality problems were exposed at the sales stage. Therefore, Wang Shi stated that “quality was the lifeline of Vanke real estate”249 and designated the year 1996 as “quality management year”, determined to solve the quality issues of Vanke products.

In the real estate industry of Shenzhen, there was always a saying, “wen ke (文科 literal arts) Vanke, li ke (理科 science) Zhonghai250(中海)”, which meant that Vanke was good at marketing, sales and property management, while Zhonghai was good at building engineering and cost control. As Vanke and Zhonghai maintained good relations with each other, Vanke sent staff to Zhonghai to study project management and cost control, while Zhonghai also sent people to Vanke to learn marketing and personnel training. Zhonghai’s business scale was once three times that of Vanke. However, Zhonghai was hit badly in the Asian financial crisis of 1998. At that time, Wang tried to lobby Sun Wenjie, the general manager of Zhonghai, to merge Vanke with Zhonghai, so as to complement each other’s strengths and become a company with advantages in all aspects of project development. Wang’s suggestion did not receive a response from Sun. Thus, Vanke launched a poaching plan in 2000, called “Piracy Plan”, especially for outstanding expertises of Zhonghai. In the following years, there were dozens of mid-level and above technical cadres joining Vanke. By 2004, according to Vanke personnel department, 40% of general managers of first-line companies came from Zhonghai.251

Joining with Zhonghai’s technicians, Vanke’s engineering quality was improved. However, upon continuing to adopt the traditional on-site pouring method, the quality of projects still depended on the personal level of construction workers and managers. Some frequent quality problems in residential buildings could not be thoroughly solved, such as the leakage of rooves, doors and windows, and walls. With the company’s expansion, the traditional building mode turned out to be an obstacle to Vanke’s large- scale development. Therefore, Wang proposed the standardization and industrialization of residential buildings and commissioned the Vanke Architectural Research Center to carry out the research and development.

Wang’s idea of housing industrialization was not understood by other developers and even internal personnel, because there was no case worldwide of real estate companies promoting housing industrialization. In Japan, it was jointly promoted by builders and parts suppliers, while in Singapore, Hong Kong, Europe, and the United States, it was realized by construction companies under the leadership of government. Actually, housing industrialization was not a strange word in China. As early as in the 1950s, China learned from the former Soviet Union the standardization,

249 Ibid. 250 Zhonghai Real Estate is a central enterprise under China Overseas Development Limited. It was founded in Hong Kong in 1979 and committed to the development of real estate in Hong Kong. It was listed on the Hong Kong Stock Exchange in 1992. Since 1988, it started its domestic real estate business in Shenzhen and expanded to major cities in the country. Zhonghai made Shenzhen its headquarters and gradually shifted the focus of its business to the domestic market. 251 Wang Shi. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 25. 110 industrialization, and mechanization of the construction industry, mainly developing some prefabricated components and construction machinery. In the 1960s and 1970s, the standardization design and the production capacity of the components were further improved, but as the key technical problems were not solved, the prefabricated parts at that time were usually associated with poor quality, safety issues and high cost. In 1994, the Ninth Five-Year Plan of Science and Technology officially put forward the housing industrialization. The Ministry of Construction promulgated the “Outline of the Pilot Work for the Housing Industry Modernization” in 1996, and established the Housing Industrialization Promotion Center in 1998. Seven national housing industrialization bases were set up, including Tianjin Construction Steel, Beixin Group, Haier Group, and Zhengtai Group. However, the technology of the residential industry was still at a low level, and the industrialized production system was not formed. The enterprises in the whole industrial chain failed to cooperate with each other, and it was still not applied in practical projects.

In this context, the Vanke No.1 experimental building was completed in the first half of 2006. Through this construction, the Architectural Research Center generally understood what kinds of products could reflect the characteristics and advantages of industrialized housing. The No.1 experimental building was just a temporary building, which was demolished six months later. After that, Vanke bought a parcel with an area of 200 mu 252 in Songshan Lake, Dongguan to establish the Vanke Housing Industrialization Research Base.253 At the end of 2006, the No.2 experimental building was started and completed soon. The research data showed that the construction error rate could be reduced to 0.01% and the leakage rate at the joint of the outer wall and the window frame was 0.01% after the industrialization. The margin of error was calculated by the millimeter. Moreover, the large-scale industrialization mode made the construction process and residential products more environmentally friendly, and the resource utilization more reasonable: steel formwork had a high reuse rate; waste could be reduced by 83%; material loss was reduced by 60%; building energy saving was more than 50%; site workers could be reduced by up to 89%; construction periods could be shortened by 25~35%.254 For the Architectural Research Center, the purpose of R&D was its practical application. But it was in the experimental stage, and there were many uncertain factors. Moreover, without the support of upstream and downstream industrial chains, and no mass production being formed, the cost would increase by nearly 40% when compared with the traditional construction method. At that time, it was the golden stage of real estate development. Developers made huge

252 Mu (亩) is a specific unit of land area in China. One mu equals 667 square meters. So, 200 mu is 133,400 square meters. 253 Originally, Vanke Housing Industrialization Research Base was planned to be set up in Shenzhen, but the land in Shenzhen was too expensive, and the Shenzhen Construction Bureau did not understand why Vanke was engaged in industrialization research, believing that Vanke was only looking for a pretext to take land, so it refused Vanke’s request for land. In fact, local officials in Dongguan (东莞) do not understand why real estate developers do residential research either, but because Songshan Lake (松山 湖) was a new area at that time, the presence of Vanke, as such a well-known company, was of great significance to the development of the new area, so they agreed to Vanke's land requirements. See Shi Wang. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 126-127. 254 Lin Ding. Technological Vanke. IT Manager World, No.20 (2007), 60-64. 111 profits as long as projects were completed quickly. If Vanke’s own front-line companies were unwilling to industrialize, how to promote industrialization to the entire industry? Eventually, Shanghai Vanke accepted the task of trying industrialization. In September 2007, the No.20&21 buildings in Shanghai Vanke’s project of New Mileage were topped out, becoming the first commercial housing built by factory method in China. Although the prefabrication rate of these two buildings was only 37%, which could only be regarded as a rudimentary level of the housing industrialization, it gave Vanke great confidence and gave a shock to the real estate industry in China. Following the Shanghai company, Shenzhen Vanke also built a building with factory technology in the project of the Fifth Garden. At the same time, the Industrialization Base continued to launch the No.3 building, which optimized and updated the technology constantly. The No.4 building was completely designed and built according to the industrialized development process for the first time. The No.5 building built three types of standard products to meet the needs of customers who changed their housing for the first time to improve their living conditions. For large-scale industrialization promotion, the No.6 building produced exquisite effects that could not be achieved by hand. 255 On November 12, 2007, Vanke Housing Industrialization Base was officially listed as National Industrial Base and became the only research base set up by a real estate company in eight national bases. In 2009, the Beijing Construction Committee took the lead in subsidizing industrialized housing, and successively, Shanghai, Kunming and other cities began to implement subsidizing policy. In 2010, Vanke built Longyueju, an affordable housing project, for the Shenzhen government. The use of industrialized technology made the construction faster than, and quality clearly superior to, other projects. It became a project that gained attention and recognition by governments at all levels. The newly commenced construction area with industrialized method reached 84% in Vanke projects in 2017.256

Through the implementation the housing industrialization project, Vanke solved the problem of product quality, realized large-scale development, and practiced the concept of environmental protection and green development. In addition, housing industrialization, subverting the tradition, also subverted all aspects of Vanke’s internal operations. Not only within Vanke, the upstream and downstream industries that cooperated with Vanke, such as component manufacturers, furniture suppliers, and construction parties, had to be redefined according to industrial standards. Although Vanke industrialization had made great progress, it still needed the cooperation of policies and upstream and downstream industrial chains to be fully promoted in the real estate industry. Therefore, as Wang said, “the housing industrialization was still on the way”.257

As mentioned above, the first core value of Vanke is to make customers proud by continuous provision of products and services beyond customers’ expectations. Vanke

255 Shi Wang. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 176. 256 See Vanke Co., Ltd. Vanke Annual Report 2017. 257 Shi Wang. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 177. 112 spared no effort to implement customer-oriented credos in product design, construction quality, and property services. Vanke educated a large number of Chinese customers about what a good quality house was and what good service was. However, customers had a wide range of demands and complained about Vanke frequently. Many instances of Vanke’s reflection and progress started with customer complaints.

Wang recognized early that the Internet revolution would be a powerful force for transformation of the housing market and urban life. Before the Internet became popular, developers had a high degree of control over information. Every time a new project, a new concept or a new layout was launched, developers made all the annotations. Buyers only accepted information passively as they had no chance to hear other consumers’ opinions and make extensive comparisons. The popularity of the Internet gradually freed consumers from the status of having limited access to information, and the situation of information asymmetry had been improved. Vanke believed that the interaction with buyers on an equal information platform enabled Vanke to face its consumers truly and to grasp the ever-changing demands of its customers. At the same time, it also challenged the adaptability, innovation and management capabilities of Vanke employees. In 1992, Vanke Weekly started publishing, mainly for internal communication and external publicity of real estate trends, company products, and corporate image. In 1999, Tencent258 launched QQ, an instant messaging network tool. This convenient, open and free communication completely changed the way in which Chinese people exchanged information. Inspired by this, in 2000, Vanke launched its online forum, www.vankeweekly.com, which opened the panels of “Wang Shi Online” and “Complaint Vanke”. Everyone could communicate online directly with Wang Shi, and all customers could complain to Vanke publicly.

Anyone who has visited Vanke sales office or who has seen Vanke sales brochure would find the signs to inform them of unfavorable factors and potentially problematical information within one kilometer outside the boundary of the project, such as high- voltage lines, refuse transfer stations, public toilets, construction site noise, highway noise, etc., and with specific location indications as well. Sales staff would also verbally convey this information. This practice of informing about disadvantages originated from a two-year complaint in Vanke Wonderland of Wuhan (武汉). In 2001, when Vanke Wuhan company signed a land use agreement with Donghu district government of Wuhan, it was stipulated that the garbage dump, which was about 800 meters away from the site, would be closed and greened by the government within two to three years. In early 2002, the first phase of the project began to sell. In June, some buyers noticed the problem of the garbage dump and began to discuss it publicly in the Vanke

258 was founded in Shenzhen in November 1998. It was listed on the main board of the Hong Kong Stock Exchange on 16 June 2004. QQ launched by Tencent in 1999 provided users with a huge and convenient communication platform, which profoundly affected and changed the communication mode and living habits of hundreds of millions of Chinese. Tencent is currently one of the largest internet integrated service providers in China, and also one of the internet enterprises with the largest number of service users in China. 113 online forum. The apartments were delivered at the end of August when it was exactly the hot period of summer. Some residents began to complain about stench and flies. Wuhan Vanke’s staff thought this was an issue outside the red line of the project. They also believed the government would close the dump soon. Thus, the problem was underestimated, and the residents’ complaints were not appreciated. In the summer of 2003, instead of being closed, the garbage dump was illegally expanded and started burning garbage. Stinks and flies had seriously affected the daily life of residents. Owners made fierce complaints on Wang Shi Online and held a protest rally at the opening of phase III on September 29. Wang promised that Vanke Headquarters would set up a special team to deal with this matter, puting funds into improving the conditions of the garbage dump and urging the government to relocate it. In December 2003, the new site of the garbage dump was approved, and the original garbage dump would be transformed into a garbage transfer station. Based on the lack of understanding of the garbage transfer station and the distrust of the government, some owners also lost their trust in Vanke. They assembled through the Internet and expressed their strong opposition by hanging banners and slogans, and large-scale mass complaints finally broke out. While visiting and appeasing the residents, the Vanke special team intensified its efforts to manage the garbage dump and used more resources to seek any possibilities to relocate the garbage transfer station. On June 30, 2004, the delivery day of phase II and III, the garbage dump was permanently closed, and all the coverage work was completed. This two-year complaint was finally resolved.259 Vanke carried out an internal review of this incident, recognizing that the company often did thorough research within the project red line, but paid little attention to the external environment. Wuhan branch did not pay enough attention to the initial stage of complaints, and failed to feedback the most authentic information to the headquarters, which delayed the best time to handle the incident properly, and finally led to the occurrence of mass complaints. Since then, Vanke formulated the principle and specific practice of informing customers of unfavorable factors. This information transparency not only made buyers consume transparently but also allowed Vanke to avoid unnecessary complaints in the future.

Housing is a special kind of consumer goods, which has a high price and affects people’s daily life. Therefore, buyers complain whenever they feel unsatisfied. If complaints are not properly responded to, buyers often take more drastic measures. With the help of the Internet, consumers with the same appeal can easily form alliances to make greater momentum to attract the attention of developers and public opinion, or even government departments. Even if developers pay more attention to quality and management, it is impossible to achieve zero complaints, because companies cannot pursue zero complaints with unlimited input costs and regardless of profit, meanwhile, customers are not all rational enough to make reasonable complaints. Thus, complaints can only be minimized, but a zero record is impossible.

259 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 277-280. 114

Although meeting and exceeding customers’ needs is the core value of Vanke, Vanke did not compromise in the complaint of Shenzhen Golden Home. Golden Home is a high-density project near the city center. Due to the limited land area, Vanke created the concept of “pan club” to solve the problem of lack of green space and activity venues. It expanded and organized the functions of a clubhouse in outdoor spaces, roof gardens, and overhead floors, and perfectly integrated activities with the landscape. This project was sought after by the real estate and design circles. Golden Home was naturally a great success in sales. But in December 2001, almost every balcony or window of the four street-facing buildings of the project was marked with the extremely eye-catching characters: “Be deceived in purchase”. It turned out that the owners of the phase I and II strongly protested against the construction of the third phase on the eastern side of the community (see photo 3.11). They pointed out that there was no so-called phase III in Vanke’s sales brochure and community planning model when they bought the house. Vanke’s behavior violated the promise of sales, which would seriously affect their future living environment and quality of life, lower the property value, and infringe on the owners’ rights and interests. The residents collectively blocked the construction site of phase III, causing conflicts with security personnel. Subsequently, they rushed to and blocked the street holding the banner of “Be deceived in purchase”, which affected the urban traffic until they were finally persuaded to withdraw by the traffic police. In Vanke’s explanation, the third phase was in the original planning and also marked in the sales brochure (but some owners denied noticing it). The original program of the third phase was “commerce + hotel + apartment”, which was now adjusted to “commerce + residence” to avoid a series of negative effects brought by hotel operation, such as personnel flow, noise, sanitation, etc.. Moreover, in the adjusted plan of phase III, the floor area was downsized (commercial area 7,300 square meters less and residential area 1,300 square meters less respectively) to reduce the buildings’ height and volume, which meant Vanke sacrificed nearly 100 million yuan of sales income. At the same time, the 750 square meters of green space shared by residents and commercial customers was adjusted to a roof garden of about 2000 square meters exclusively for the residents, adding leisure facilities and swimming pool. Vanke believed that these adjustments were in line with the interests of residents in Phase I and II. The most important thing was that the plan modification was approved by Shenzhen Planning and Land Resources Management Bureau. 260 The owners refused to accept Vanke’s explanation, and finally took Vanke to court for “sales fraud” and asked for compensation of 1,500 yuan per square meter. Vanke insisted this requirement was unacceptable as it was without factual and legal basis. On January 29, 2002, the Futian District Court of Shenzhen held a three-hour court debate on the case. On February 28, under the auspices of Shenzhen Planning and Land Resources Bureau, the owners' representatives and Shenzhen Vanke reached a preliminary understanding and formally signed a settlement agreement.261

260 See “Vanke’s notes on the Golden Home incident and the response to the owners”. http://bbs.szhome.com/30-30-detail-39293.html (access on 6/3/2019). 261 See “Around the change of planning of Golden Home phase III”. http://www.vankeweekly.com/?p=70388 (access on 6/3/2019). 115

Nowadays, many people thought that collective action was easy to create a powerful public opinion and force the government and enterprises into submission. This was particularly easy to happen in some sensitive social issues, such as demolition and reconstruction of old urban areas, children’s enrollment, and the doctor-patient relationship. People even thought that with the help of public opinion, they could ignore the legal and moral constraints. It was wondered whether this incident of Vanke Golden Home would enable consumers to re-examine the boundaries of their rights and interests and the bottom line of their actions? On the other hand, Vanke experienced a severe crisis of trust, which also allowed Vanke to reflect on the approach in dealing with customer relations. Although Vanke stood on the legal and reasonable side, Wang still formally responded to the media in a press conference for publishing the annual report on March 15, 2003, which also happened to be the Consumer Rights Day of China. He believed that there were always contradictions between developers and buyers. The question was whether the contradictions were expressed fiercely. In the Golden Home incident, he reflected that it was inappropriate for Vanke not to publicize the adjustment and seek owners’ opinions (although the Planning Bureau said the planning adjustment did not require the consent of the residents). Because the new planning was more beneficial to the buyers and got approval from the Shenzhen government, Vanke failed to pay enough attention to and deal with the incident in time at the beginning, which led to the deterioration. Vanke needed to reflect carefully to avoid similar incidents.262

Photo 3.11 Shenzhen Golden Home, Futian District, Shenzhen

Source: Shenzhen map and field research in Vanke Golden Home Shenzhen, 12/12/2018.

In the same year of the Golden Home incident, Vanke experienced another fierce

262 See “Wang Shi’s talk about the Golden Home incident”. http://bbs.szhome.com/30-24600-detail- 72171-0-1-1.html (access on 6/3/2019). 116 group event, the Zhongnan Bus incident. Shenzhen Wonderland, as mentioned above, was an iconic project of Vanke. Now people can choose a convenient subway or bus to go there. However, when the project was delivered, it was a desolate suburb, with inconvenient public transportation. For the residents’ convenience, Vanke launched a paid service of a private bus for the residents. However, in August 2000, Shenzhen Transportation Bureau issued a document prohibiting the operation of the private residential bus. Vanke had to introduce professional social resources and reached a cooperation agreement with Zhongnan Buses. In April 2001, the Wonderland special bus was officially operated by Zhongnan Buses. Since then, complaints about Zhongnan Buses appeared in the owner online forum, focusing on unreasonable schedule, random adjustment, random stops, serious overload, expensive tickets but poor service attitude, and so on. Vanke communicated with Zhongnan Buses, but with little success. Complaints increased rapidly. Since August 17, 2001, a series of problems occurred, like bus delays, too many owners could not get on the bus, and buses did not stop at the station. On August 21, a scheduling problem occurred. After some owners waited for too long a time, they intercepted seven Zhongnan buses in the central urban area during the evening rush hours, resulting in a large area of congestion. Vanke managers and the deputy general manager of Zhongnan Buses rushed to the place and cooperated with the traffic police to manage the traffic. Before the coordination meeting was over, six drivers of Zhongnan Buses suddenly rushed to one of the Wonderland buses and hit the owners. The act of beating people caused the incident to escalate rapidly. Hundreds of Wonderland residents gathered in the community square to demand the severe punishment of the beaters, protesting that Vanke did not honor its promise. Managers from Vanke and Zhongnan Buses held dialogue with the residents’ representatives overnight to avoid further escalation. After several days of communication, a consensus was finally reached. Zhongnan Buses promised ten rectification measures, and made a public written apology to all owners, punished the perpetrators accordingly, and set up a complaint hotline.263 The lesson for Vanke from the bus incident was that although the special bus service was outsourced to the Zhongnan Buses, Vanke's owners recognized the Vanke brand and blamed Vanke's service for the problems. Therefore, when part of the work of property management was handed over to another company, Vanke still needed to offer strict management and supervision. The standard of Vanke service could not be lowered because of the outsourcing of service.

When the problem involves urban village reconstruction and low-income people, the relationship between developers and consumers is more sensitive. On June 11, 2018, an "Open Letter to Foxconn Employees" was posted in the factory area of Shenzhen Foxconn, which attracted workers to stop and read and was quickly forwarded on the Internet. The purpose of this letter was to ask Foxconn for a pay increase because rents had been rising in recent years, but workers' wages had not changed accordingly. In particular, the letter mentioned Vanke’s renewal project in Qinghu village next to the

263 Shi Wang, Chuan Miu. The Way and Dream: I Spent 20 Years with Vanke. (Beijing: CITIC Press, 2006), 227-228. 117 north gate of Foxconn Longhua factory. They were worried that the rent of urban villages would be doubled or even tripled after the renovation by Vanke. With the help of the Internet, the letter was widely disseminated, causing unexpected repercussions at different levels in Shenzhen and triggering discussions on Shenzhen workers’ living conditions, rental market, and housing prices. Many voices were aroused to condemn Foxconn's oppression on workers and question Vanke's “Wancun Plan”. In fact, the day before the letter was posted, on June 10, a group of migrant workers living in urban villages around the Foxconn factory held a tenants’ meeting and wrote down the Letter to Vanke, Landlords and Regulatory Department from Representatives of 130,000 Foxconn Workers, which was published in a Wechat public number and widely and quickly disseminated. The Letter mentioned that Vanke signed a cooperation agreement with the landlords of urban villages, which may cause the rent increase, which should be monitored by the relative government department. Vanke, who was pushed to the top of the storm, responded quickly on the evening of June 11, promising to keep the rent within the current price range after the renovation. Vanke took two completed urban village renovation projects as examples, Xinweizai Village and Yutian Village. The environment and safety of these two villages were greatly improved after the renovation, and all the apartments were equipped with household appliances and furniture, while the price was still maintained in the previous rent range.264 At the 2017 Annual General Meeting of Vanke on June 29, some shareholders questioned the “Wancun Plan”. Vanke once again responded that although there were many uncertainties and difficulties, Vanke would maintain the stability of rent and provide a better environment and services for tenants.265

Following the Foxconn Incident, there were many rumors that many long-rent apartments failed to operate, and some long-rent apartment companies have withdrawn from the market. Vanke has also been rumored to have terminated the “Wancun Plan”. Although Vanke has repeatedly refuted rumors, it was an indisputable fact that it was difficult to make profits from long-rent apartments in a short term. This incident reflected the current situation of competition and interaction among Shenzhen government, developers, and housing consumers. For the government, addressing affordable housing for low- and middle-income people is the biggest problem in residential development. For developers, it is a difficult decision to participate in affordable housing construction.

Vanke’s core value was to meet and exceed the customers’ expectation, adhering to the initial goal of promoting a lifestyle through its constant practice in product design, R&D, construction quality control, transparent sales, property services and long-term development of communities. Vanke's continuous progress in exploration also brought consumers a lot of new knowledge and ideas in housing. Through interaction with residents, whether organizing community activities or dealing with fierce complaints, Vanke always learned and made progress. There were many voices on the Internet

264 Details see http://www.sohu.com/a/235754608_627934 (access on 30/7/2019). 265 Details see https://new.qq.com/omn/20180629/20180629A1B7OQ.html (access on 30/7/2019). 118 that have different views on Vanke for various complaints. But as Wang said that developers and owners were always in conflict, developers and consumers should gain experience and lessons in dealing with these contradictions. The positive interaction between the developer and the buyer can achieve understanding and tolerance to a certain extent, which is more conducive to the progress of developers to build better houses and communities, and ultimately benefit buyers.

3.6 Conclusion

In rapid urbanization, the unremitting efforts of developers have promoted the development of urban housing and the improvement of Shenzhen’s urban spatial structure and urban images, and improved ordinary people’s living quality and environment.

Vanke is major study of private companies in Shenzhen. Vanke experienced diversified development and went through a long period of adjustment to embark on the road of professional real estate development. After achieving refinement and industrialization in residential buildings, Vanke repositioned itself as an urban service provider. It has also experienced a series of incidents, such as the near breakdown of the capital chain, almost being swallowed by the capital market, participating in the high-priced land competition, complaints from buyers and even fierce conflicts. In these incidents, Vanke has constantly learned lessons and adjusted itself, and finally become the leader in China's real estate industry.

Vanke has certain representativeness, but more significant is its uniqueness. Every developer that can survive must have its uniqueness, forming a set of survival rules, a set of methods to play with the government, and a way to respond to buyers’ needs. The early era when opportunists could stand out had passed. Nowadays, the real estate industry has changed from an emerging industry to a traditional industry in the Internet age. In the tripartite game relationship, how can the developer cope with the government’s policy adjustments calmly and maintain good relations with the government? And how can they satisfy the needs of buyers and win the trust of consumers? From the case study of Vanke, it can be seen that responding to the government and satisfying the buyer are not the goal of the developer, but are the ways to achieve the goal. Developers are now more like resource integrators. The birth of a real estate project is the integration of capital, policy, status and future of the city, needs and pursuits of people's lives, new materials and technologies. To be a successful integrator and to achieve sustainable development, the most important thing is to improve the company's professionalism. Only when the company is strong can it assume the role of the integrator and integrate the upper and lower relationships to form a joint effort to promote urban development in China.

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Chapter 4: Housing Choice: Housing Conditions and Transportation

4.1 Introduction

On November 16, 2002, an article entitled "Shenzhen, Who Abandoned You" was posted on the forum of People's Network. It spread quickly through the Internet and was published in the Southern Metropolitan Daily later. It attracted the attention of the SMPG and triggered a heated discussion from the top of the government to the bottom of the ordinary people. All of them were concerned about the future of Shenzhen's urban development.266 In this way, Shenzhen people expressed their thoughts about the city and participated in its development. With the development of mobile Internet, and the rise of we media, people expressed their ideas and appeals faster and in more diverse ways. People's voices were more and more easily heard, and their choices were more and more valued. In addition to this obvious and strong way of expression, people's behavior and choices in everyday life were an expression, affecting all aspects of the city imperceptibly.

In the development of housing, people's choice of housing and spatial use of housing and community were particularly important. Developers as large as Vanke also needed to strive for product research and development constantly, and quality improvement to meet the requirements of consumers. The Shenzhen government also strengthened the construction and supply of affordable housing because of the demands of Shenzhen people. In the housing system, although standing at the lower level, the buyers express their opinions by using the right of choice. Although the choice of the buyers is within the range provided by the government and developers, their choice

266 On September 16, 2002, Ping An Insurance announced that it would invest two billion yuan to build Ping An Financial Building in Lujiazui Financial and Trade Zone in Shanghai. This sounded like Shenzhen's enterprises were expanding northward, but according to insiders, the core business departments of Ping An Insurance had already moved to Shanghai. On October 12, 2002, there were rumors that two high-tech enterprises of Shenzhen, ZTE and Huawei, intended to move their headquarters to Shanghai. More shocking news ensued. According to some media reports, the relocation of China Merchants Bank to Shanghai was being demonstrated. CITIC Securities Headquarters planned to move back to Beijing. The Hantang Securities Headquarters established in Shenzhen had moved to Shanghai. Wal-Mart, the world's top 500, would move its purchasing headquarters from Shenzhen to Shanghai in the near future. At the same time, talent from different industries was also moving with the tide, turning their sights to the Yangtze River Delta region. A survey of College Students' employment intentions showed that Shanghai and Beijing were the most attractive cities for college students. 32.37% of college students regarded Shanghai as their first employment goal, 27.67% in Beijing and 12.13% in Shenzhen.

More and more excellent enterprises and skilled workers were looking to Shanghai, Beijing, Guangzhou and other places. In this competition for economic discourse power and high-level talent in the 21st century, Shenzhen had obviously fallen behind. Without policy advantages and subject to economic and geographical conditions, Shenzhen's disadvantage was becoming more and more obvious in the competition. Shenzhen, once the frontier of China's reform and opening up, once the most dynamic city in China, once created many miracles of the special economic zones, once a shining young city, but now it seemed to have lost its luster.

At the end of 2002, upon seeing the outflow of talent and enterprises from Shenzhen, a man named Wo Zhongxiao, who was a financial securities researcher and enterprise capital operation planner, deeply felt that Shenzhen was losing its advantage. He published the long article "Shenzhen, who abandoned you " on the Internet under the name of "wo wei yi kuang" (我为伊狂), which aroused millions of netizens from all over the country to participate in the discussion.

120 can make the developers adjust the development strategy and improve the design and construction quality, and can also influence the government to adjust policies, urban planning, and the layout of public facilities. After moving and settling down in the new home, the residents participate and affect the formation of the living environment and community style through their practice of everyday life, and further to affect the appearance of the urban region.

In the past two years, the author interviewed total 34 Shenzhen people about their daily life stories to figure out their standards of housing choice, and the way they used community space. The author also learned about their interaction with developers and the government and their understanding of Shenzhen's urban development in the economic reform. Without setting specific questions in the interview, the study purpose, and the purpose and content of the interview were introduced first, then the interviewee freely told their Shenzhen stories. Among the interviewees, two were school cadres who talked about education, one was an insurance company manager who introduced the old-age community, one was a real estate agent talking about how housing prices in a certain area were affected by schools, one was a retired cadre of Shenzhen Housing Bureau who gave a briefing on the general housing development in Shenzhen, and the other 29 interviewees told their Shenzhen stories. These interviewees were recommended by relatives, friends, and former colleagues, and screened for coverage and representation through age, gender, and occupation. Most of the 29 respondents who told Shenzhen stories were married, ranging in age from 1950s to 1980s. The number of males and females was nearly equal (see figure 4.1). Interviewees were from various walks of life, including government employee, retiree, real estate agent, employee in foreign enterprise, lawyer, housewife, cleaner, doctor, self-employee, company founder, employee in state-owned company, investment manager, beautician, law enforcement staff and other professions. Five of the 29 people had never bought a house in Shenzhen. The rest bought a house or lived in a house bought by their parents. Some of them owned more than two houses. Most of the interviewees had cars, but in recent years many people chose to travel by public transportation (see figure 4.1).

The questionnaire included questions in housing, transportation, education, pension, and daily consumption (see appendix 01). Questionnaires were sent out by paper and Wechat electronic forms, with 42 and 45 questionnaires retrieved, respectively, then totaling 87 valid questionnaires. Paper questionnaires were placed in a street office in Futian District. People who came to handle affairs were invited to fill in it. Wechat electronic questionnaires were distributed on the Internet by relatives, friends, and previous colleagues. Thus, the respondents were quite random. The majority of respondents were married, aged from birth years in the 1960s to 1990s. The number of females was more than males (see figure 4.2).

Through the interpretation and analysis of the information obtained from interviews and questionnaires, and combining with the theory of daily life, this and the next chapter

121 determine the principle concerns in Shenzhen people’s everyday life, then lead to the research of development in housing and community, transportation, education, and pensions. It aims to explore further how Shenzhen's housing development affected the improvement of people's living environment and quality, and how people's everyday life influenced housing development and urban development imperceptibly.

Figure 4.1: general information of interviewees

Source: based on the data collected by interview from 2/2018 to 2/2019.

Figure 4.2: general information of respondents

Source: based on the data collected by questionnaire survey from 2/2018 to 2/2019.

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4.2 Housing and Community

The interviewees were emotional, especially those who came to Shenzhen in the early years. They witnessed the change of Shenzhen from a border town to today's megacity. They recalled their past life and work by reviewing their housing experiences. Most of them changed from single to having a family and children, and their living standards improved greatly, especially the improvement of housing conditions. Ordinary people's housing experiences formed the history of Shenzhen's housing development.

4.2.1 Iteration of Housing and Community Most of the 116 respondents (including interview and questionnaires) once lived in dormitories. The conditions of dormitories varied according to the units they worked for (details see appendix 02). Similarly, most respondents once rented houses. The rented houses had different types, such as peasant houses, single dormitories, and suite- house, which were mainly determined by the tenant's working place, income level, and family structure. The rented houses were mostly small size and could only meet the needs of life (details see appendix 03). After that, most respondents bought houses. In the early stage, they bought small-profit houses provided by units or the government in the housing reform. The type and area of the house were determined by scores based on their working years and grades. The choice was limited in the available small- profit houses (details see appendix 04). Some respondents had to buy commercial housing in their first purchase because they did not meet the criteria for buying small- profit housing. Some respondents, who had economic abilities, were able to buy commercial housing to improve living conditions later. When buying commercial housing, the housing selection criteria varied from person to person, but generally, the main factors of housing selection were price, location, and house layout. Everyone's economic situation, family population, living habits, aesthetic standards were very different, so people bought very different commercial houses. Commercial housing had a wide range of options, which could meet the needs of various groups of people. Meanwhile, the design and construction quality of commercial housing were much better than that of small-profit housing (details see appendix 05).

These descriptions could help to restore the iteration process of Shenzhen housing and the characteristics of housing in different ages. Referring to Maslow's hierarchy of needs, a hierarchy of housing needs (see figure 4.3) was constructed to explain that the iteration process of housing was a process in which people's understanding of and demand for housing were constantly improving. From having no shelter to having a room to live, the basic living need was solved. With the improvement of living standards, people wanted to separate different living spaces, and with various household electronic appliances into the house, the demand for physical spaces made the house layout more reasonable and better quality. People improved their appreciation of housing greatly and started to pursue individuation, which made residential design tend to be more refined, adding many intentional elements such as style and taste. At

123 the same time, people expanded the demand from the housing itself to the residential community, and put forward security, landscape, rich spaces and other needs for planning and environment, and then required higher-level needs for neighborhood relations, living atmosphere, etc., generating a sense of pride and belonging and ultimately realizing the vision of the ideal home.

Figure 4.3: hierarchy of housing needs

Source: hierarchy of housing needs is built based on Maslow's hierarchy of needs, see Maslow, A.H. (1943). "A theory of human motivation". Psychological Review. 50 (4): 370–96.

Housing is not a fast consumable. Once residential buildings were built, they would exist in the city for at least decades. Different types of houses, as long as they were not temporary buildings, could almost all be found in Shenzhen. Buildings of different ages coexist in the city to build a city's architectural history. Following the descriptions of the respondents, the author visited several residential buildings of different ages as the following analysis of housing cases in different periods. When people were accustomed to seeing that today’s residential buildings were beautifully designed and constructed, with reasonable functions and spaces, as well as the stylish landscape and perfect facilities in communities, the design and construction of early residential buildings in Shenzhen looked rough, and the materials and technology were backward. But in fact, Shenzhen's housing development was in the leading position in China since the economic reform. Many old houses were once high-end residential buildings or design models. They were learning examples for government officials or developers in inland cities to visit. Housing in different periods should be understood in the context of economic and social development in the specific period. a. Dormitory Most Shenzhen people working in a unit could live in dormitories in the 1980s and 1990s, when the welfare housing system was still on effect. Units responded by arranging accommodation for their employees. There were not many rentable houses available in the market. Shenzhen developed a dense processing industry as the main industry at that time. Industrial zones were built very quickly, but housing and living facilities were insufficient. All units had to deal with the living needs of their workers. The dormitory conditions were quite different. Dormitories provided by government

124 departments, state-owned enterprises, and foreign enterprises were generally better than others. Most of these dormitories were built and managed properly. Each room had a specific bathroom and housed no more than four people. Factory dormitories were humble buildings or temporary buildings, usually housing eight people, with shared bathrooms on a whole floor. The worst of all were the dormitories for construction workers, which were temporary shelters with dozens of people living together. Even in the same unit, people of different positions and levels had different living treatment. For example, factory managers and technicians occupied better dormitories, which accommodated up to four people, while ordinary workers’ rooms housed eight people. They occupied different buildings normally, so that managers and workers would not be mixed together.

After the housing marketization, units no longer solved the housing problem and gradually did not provide dormitories. Some enterprises provided rental subsidies to ease the burden of their employees. Many factories, especially labor-intensive factories, still provided dormitories for workers, because factories were mostly located in remote areas with insufficient rentable room around, and workers earned limited income unaffordable for renting their houses individually. Compared with the past, the dormitory of workers has been greatly improved, equipped with toilets, water heaters, air-conditioning, and washing machines. A room normally housed four to six residents. The accommodation was free except for roommates sharing the bills of water and electricity. One interviewee, the chairman of a factory labor union, said now it was difficult to recruit workers because young people born after 1990 were unwilling to be a worker and could not bear a tough life, thus, poor accommodation could not keep workers at all. It could be seen that although dormitories were the most basic form of housing, their conditions and quality were important factors affecting people's choice. Thus, this was a problem that employers had to deal with carefully. Most of the former dormitory buildings now still exist, but they are no longer used and managed as dormitories. When housing reform was carried out in the 1990s, most of the suite- house dormitories were sold to employees as welfare houses. The single-room dormitories were handed over to the property management department or professional property rental management company for social rental.

Dormitories had two main architectural forms. One was the outside-corridor strip- shape building 267 , mostly labelled as bachelor quarters. Early outside-corridor dormitories used an outer corridor to connect more than a dozen single rooms. Each floor shared a bathroom and shower. Stairs and public rooms were usually placed in the middle of the strip-shape building for each room’s convenient access. Clothes hanging in the corridor was noticed by passers-by, then, people lost some privacy. And dripping water from clothes made people uncomfortable. The floor layout of dormitories

267 The outside-corridor dormitory is in line with the climate characteristics of southern cities. The southern climate is wet in spring and hot in summer, and the outside corridor is suitable for ventilation. It is not cold in winter, so walking on the outside corridor does not feel cold. The building does not need heating, so it does not cause energy loss. In the north, the inner corridor is often adopted because of the cold winter, the outside corridor is not conducive to wall insulation and heating energy is more likely to be lost. 125 was improved gradually. A balcony was added first to solve the problem of drying clothes; then a bathroom was added to occupy part of the balcony (see photo 4.1). Another form was the suite-house, which was a flat with one to four bedrooms (mainly two and three bedrooms) and an independent kitchen and bathroom. When used as a dormitory, each room was usually occupied by two people or a family, sharing the kitchen and bathroom. For example, Tongxinling community was the earliest government dormitories. There were two main floor layouts, two bedrooms in area of 70 square meters (for four people or two families) and three bedrooms in 78 square meters (for six people or three families) (see photo 4.2). Some units with good economic conditions would allocate a whole suite-house to those employees who reached the required level and had a family.

Photo 4.1: typical floor layout of outside-corridor dormitory

Source: sketch based on the observation in the field research

Photo 4.2: Tongxinling community, Futian District, Shenzhen

Source: pictures from housing sale website https://sz.centanet.com/xiaoqu/xq-prrdaaffjd/ https://sz.esf.fang.com/chushou/18_216786929_18270816x2810287424_160001149.htm https://sz.esf.fang.com/chushou/18_216807885_16417957x2810287424_160028599.htm (access on 26/5/2019)

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Several respondents lived in different dormitories of Shekou Industrial Park, which were built early and maintained well, and still in use. The author visited Sihai (四海) and Shuiwan (水湾) C zone. Sihai dormitory had no balcony, and clothes were fully hung over in corridor. Some rooms also had the air conditioners hung on the wall of the corridor (see photo 4.3). Each room of Shuiwan C zone had a balcony, which was used as a kitchen by the tenant. So, clothes still were hung over in corridor. The dormitories in these two zones were rented to various kinds of tenants, which seemed to be chaotic. The number of people living in a room was uncertain and determined by the tenants themselves. Some rooms even housed three generations. With the permission of a tenant in Shuiwan C zone, the author entered the room to take photos (see photo 4.4). The tenant was a couple and came from other province to work in Shenzhen. The grandparents had to come together to help taking care of the child. So, total of five people in three generations lived in this single room. The balcony was transformed into a simple kitchen fueled by canned liquefied gas. The monthly rent of a single room was 1500 yuan, and the price increased every year.

This was an epitome of the living conditions of the low-income people in Shenzhen, who usually did not have Shenzhen household registration and were not qualified to apply for low-rent housing in the housing security system. They could only rent old residential buildings or urban villages with poor living conditions at affordable prices. One family and even three generations were crowded in limited space. This was the most difficult problem that the SMPG has not been able to solve for a long time. As a migrant city with 70% of the non-registered population, if the government only focused on the livelihood of the registered population, the people who provided all kinds of basic services and construction for Shenzhen would have to leave because of the unaffordable housing and other livelihood problems. A city that only had the elite class was not sustainable development. In Shenzhen's latest housing reform document, some people who provided basic services for the city had been included in the urban low-rent housing plan for the first time. This was a decision after deep reflection and a good start. However, with Shenzhen's huge non-registered population, when could break the barrier of household registration was not a matter of the day.

Photo 4.3: Sihai dormitory, Shekou Industry Park, Shenzhen

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Source: photo was taken in the field research on 10/12/2017.

Photo 4.4: Shuiwan C zone dormitory, Shekou Industry Park, Shenzhen

Source: photo was taken in the field research on 10/12/2017. b. Small-profit Housing Small-profit houses were developed by Shenzhen government and distributed to government employees and eligible applicants in the 1980s and 1990s. Most of them were multi-story buildings. Since the 1990s, there were high-rise small-profit houses. In the early years, some enterprises built their own houses or bought commercial

128 houses and then allocated them to their employees as small-profit houses. After the 1990s, individuals directly applied to the government for purchase, provided that they were married, and both husband and wife were registered residents in Shenzhen. The multi-story residential areas built by the government in the 1980s mainly included Tongxinling, Yuanling, Xiabumiao (下步庙), Hongli Village (红荔村), etc. The houses built by enterprises were mainly Huaguoshan community (花果山社区), Rose Garden, Zhaobei community (招北小区), Airong Garden (爱榕园) and Cuizhu Garden (翠竹园) in Shekou Industrial Park. These houses were initially allocated as dormitories to government employees and business employees. In the late 1980s, the government encouraged employees to buy their private houses. These houses were sold at low prices from ten thousand to tens of thousands of yuan and turned into private properties in the subsequent housing reform. In the 1990s, municipal and district governments began to build large-scale small-profit housing communities, which were mostly multi-story and high-rise mixed communities, including Meilin Village (梅林村), Yitian Village (益田村), Taoyuan Village (桃源村), Sanhuan Village (三环村).

Mao Wei defined the housing built before 1996 as the first generation of Shenzhen residential products. Although the author disagrees with this one-size-fits-all approach, his argument that the first generation of products was "extensive development" and belong to "subsistence type and low-cost consumption" 268 was worth learning. Although Shenzhen housing was advanced in design, it still aimed at meeting people's basic living needs and focused on practicability. In the stage of multi-story residence, the function of residential space was ambiguous. There was usually only one living- room, without distinction between the living room and dining room. And there was only one bathroom without the concept of the master suite (see photo 4.5). Consumers usually only cared about whether the floor layout was square and practical, without concern for the external environment and management. Therefore, most multi-story residential communities adopted the determinant arrangement most in line with the requirements of orientation, lighting, and ventilation. Planting trees between buildings meant greening areas. Without awareness of community and safety management, passive security was carried out only through the anti-theft doors of each building and the anti-theft nets of each apartment (see photo 4.6). The supporting facilities also focused on practicability, mainly equipped with farm markets, schools, kindergartens, small shops, etc. There were no facilities and spaces for leisure, entertainment, and sports. In materials and technology, the domestic standard at that time was followed. In the early stage, a large number of prefabricated panels and prefabricated doors and windows were used. The cement label of the wall was low, and the yellow mud mortar with poor cohesion was used in large quantities. The overlap of prefabricated panels was only 10-12 centimeters which created safety risks. Later, it began to use the cast- in-place floor, but the floor design thickness was only 10 centimeters and often was built as 8 centimeters by jerry-building. People could have a shaking feeling when moving on such a floor269. By the time of building high-rise small-profit housing, all

268 Wei Mao and Xiaomo Wang. Revolution of Living (Beijing: Haichao Press, 2000), 6. 269 Information collected in the interview 129 aspects were greatly improved. In floor layout plan, stairs, kitchens, and bathrooms got natural light. The concept of double bathrooms and dry-wet zoning begun to be applied in the bathroom design. The enclosure layout has emerged in the community planning to create public community space. The seperation of people and vehicles in circulation planning was adopted to enhance the security of the community.

Shenzhen was financially weak and had a large gap in housing at that time. Therefore, the construction of small-profit housing, especially in the early stage, required both cost control and tight construction time, so the construction quality of small-profit housing was relatively low. Most importantly, people were at the bottom of the housing demand at that time; that was, people required basic accommodation to meet their basic living needs. Moreover, compared with the living standard in the hinterland, the suite-housing in Shenzhen was an advanced design, which made most of the new arrivals in Shenzhen satisfied with the great improvement in housing condition. However, the design and construction of small-profit houses could not represent the material and technical standards at that time, but could only be used to understand the level of economic development and people's understanding of and demand for living conditions in Shenzhen, because the design and construction of commercial houses which would be discussed below were much higher than small-profit houses. Although these early houses were dilapidated, with various problems that could not meet today's standards, they occupied the best location in the city. After years of development, the nearby public facilities were perfect, and there were usually famous schools around them. Therefore, the purchase and lease of these houses were very active, climbing to extremely high prices. This part will be detailed in the following chapter on education.

Photo 4.5: Huaguoshan community, Shekou Industry Park, Shenzhen

Source: pictures from housing sale website https://shenzhen.qfang.com/sale/100254276 https://shenzhen.qfang.com/sale/100237294 (access on 27/5/2019)

Photo 4.6: weak prevention of gates and anti-theft nets

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Source: photo was taken in the field research on 10/12/2017. c. Commercial Housing The development of commercial housing began in the early 1980s, but almost all of it was sold to overseas people. The Donghu Liyuan was the earliest commercial housing in Shenzhen. Yijing Garden 270 (怡景花园), which was also located in Luohu District, construction commencing in 1982. It included 42 six-story apartments and 266 two- story villas, all of which were sold to Hong Kong people or overseas Chinese (see photo 4.7). The pictures of Yijing Garden indicated that the design level and construction quality of commercial housing was much higher than that of dormitories and small-profit houses in the same period. Commercial housing development had the freedom to base itself mainly on the developers' judgment of the needs of target customers, cost control, and revenue expectations, without being limited to the national housing design and construction standards. In addition to overseas people, some rich private owners who were not qualified to buy small-profit housing also began to buy commercial housing. But until 1998, when the state formally abolished the housing welfare system of physical housing distribution, commercial housing with the public as the main consumer was beginning to be built in large quantities.

270 Yijing Garden was a high-end residential community located in Huangbeiling, Luohu District, with a total land area of 27.78 hectares and a construction area of 103,000 square meters. It was built from 1982 by Shenzhen Special Economic Zone Real Estate Company, and completed in 1988. It was divided into five groups with 42 six-story apartments and 266 two-story villas. The planning of the project flexibly used the terrain and natural landscape. The Y-shaped and rectangular floor layout ensured a good orientation and landscape, and does not produce sight interference. The facade of the building was of Spanish style, with high-grade materials and exquisite construction. The community was equipped with a primary school, a kindergarten, a shopping center and entertainment places. The whole area was carefully planted and maintained, forming a very pleasant living environment. For more information, see Department of Real Estate Industry, Ministry of Construction of PRC, China Real Estate Association, Shenzhen Construction Bureau, Shenzhen Land Bureau and Shenzhen Real Estate Association, co-ed. Shenzhen Real Estate Guide (Beijing: China Architecture & Building Press, 1990), 180-183. 131

With the increasing commercialization of housing, the real estate market changed from a seller's market to a buyer’s market. Developers needed to focus on studying and guiding the needs of buyers and to try to meet the needs of consumers on the premise of controllable costs and predictable benefits. From the interviewees' conversations, they were not critical when they lived in dormitories or bought small-profit houses, because they understood that they did not have the right to choose in the welfare distribution system. They felt lucky that they were qualified to enjoy this welfare system; thus, even upon complaining about quality problems or various inconveniences, they still accepted this condition. But purchasing commercial housing was different as they spent a lot of money, or even lifetime savings, thus, everything should be critically considered to meet most of their living needs. After the full commercialization of housing, the housing development started flourishing. It could be said that the development of commercial housing reflected the upgrading of people’s needs in living conditions, and the diversity and complexity of housing development.

The evolution of commercial housing in Shenzhen has gone through the process of building demand refinement, environmental demand refinement, and cultural demand refinement. These processes occurred in sequence, but they were compatible, that was, the requirements for buildings themselves would only become higher and higher, rather than losing the requirements of the building because of the occurrence of demand for the environment or culture. The evolution of commercial housing was also a process of learning from overseas architectural design and planning concepts, which was a process from blind plagiarism to the integration of local elements and re- innovation.

Photo 4.7: Yijing Garden, Luohu District, Shenzhen

Source: Department of Real Estate Industry, Ministry of Construction of PRC, China Real Estate Association, Shenzhen Construction Bureau, Shenzhen Land Bureau and Shenzhen Real Estate 132

Association, co-ed. Shenzhen Real Estate Guide (Beijing: China Architecture & Building Press, 1990), 180-183. a) Architecture Hong Kong residential building was the earliest imitation object of Shenzhen housing. As many commercial houses were purchased by Hong Kong people, the design of high-rise residential buildings in the 1980s directly referred to Hong Kong's design from the floor plan to the elevation. The most common type was the “井”-shaped layout of eight dwelling units on each floor. Such a floor plan could reduce public area and achieve a higher utility rate271. In addition to the “井”-shaped layout, there were other similar floor plans (see photo 4.8). Such designs had great limitations on orientation and landscape, such that only half of the dwelling units could enjoy good orientation or landscape. Meanwhile, it was prone to produce irregular shaped living-rooms or bedrooms. All respondents expressed their preference for a regular floor plan for easy furniture arrangement. Developers also found that units with irregular-shaped rooms were often difficult to promote.

Living space in Hong Kong was very crowded, so the area of a dwelling unit is usually small. Therefore, with the improvement of living standards in Shenzhen, the floor layout of Hong Kong was gradually not in line with people's needs. Shenzhen people began to require functional zoning in their houses, such as division of living room and dining room, en-suite master bedroom, and distinctions between dry and wet areas. At the same time, washing machines, refrigerators, and other large electrical appliances were widely used in the family in the 1990s. The air conditioner began to become a necessity in a southern city. The size of the television was growing. Therefore, the living-room needed to be enlarged constantly, and the kitchen needed to reserve the locations and plugs for various kitchen appliances. The design of service balcony (i.e., double balcony layout) for placing a washing machine and drying clothes began to be popular. The design of building façades began to set up a standardized location for the external machine of the air conditioner. Many families began to demand more functional rooms, such as porch, study, helper's room, storage room, etc. These demands were gradually emerging with the improvement of people's living standards, which led to the continuous reform and improvement of Shenzhen's residential design and construction, towards a more rational and humane direction.

But at the same time, in order to please consumers, some developers deliberately enlarged the areas or promoted some personalized layouts. There once appeared a trend of large-scale housing in Shenzhen, which actually led to some meaningless large size and non-practical spaces. Another once attractive design to highlight personality was duplex house in high-rise apartments (see photo 4.9). This was a special design to satisfy people's desire to live in villas. However, it often resulted in a

271 utility rate refers to the ratio of saleable area to construction area. In China, a house is priced at per square meter of construction area, thus, the total selling price of a house is price of per square meter plus construction area. Construction area includes salable area and allocated public area, such as lobby, stairs, lift, corridor, community club. Saleable area is the real area that a house occupied, excluding the public area, but including the area of balcony and walls. Carpeted area is the real useable area in a house. 133 too complex layout, a lot of wasted traffic area, and unfriendly steps for the elderly and children.

When consumers’ requirements were met, developers began to work out various details to attract buyers by introducing innovative products each time, such as the design of storage spaces, the efficient kitchen layout, and even the height and style of switches and doorknobs. The most typical examples were bay-window and entrance- garden (see photo 4.10 and 4.11). The bay-window was the window protruding out of the wall. Initially, the bay-window was designed to add the facade elements and enlarge the window area to obtain more natural light and wide vision. Later, the height of the bay-window was higher and higher, and the width of the protruding part was wider and wider, which evolved into a means to increase the carpeted area. The entrance-garden referred to the design of the porch into a large balcony, with natural light and decorating as a garden. Zhonghai Sunshine Palm Garden initiated the first entrance-garden, which was sought after by consumers. Because, first of all, the lighting and greening porch made it more comfortable to go home, secondly, the balcony area was only calculated half in the salable area, which could reduce the total price. The buyers usually close the entrance-garden with glass when decorating, and turned it into the carpeted area. Developers used the bay-window and entrance-garden as extra features to create an attractive and long-lasting selling point.272 Because, for the buyers, it cost the same to get a bigger area. Several respondents said that the extra area was an important factor in their decision to buy a house.

In facade design, most of the early houses were simple matchbox-like forms. In the late 1980s and early 1990s, developers began to pay attention to facade design. They started with some changes in windows, balconies, and rooves; then they began to introduce some architectural styles of a specific school or a famous place. In the mid- 1990s, European style buildings were once popular. Even a "Eurostyle Street" was developed in Futian Free Trade Zone. Buildings’ novel appearance could really satisfy people's desire for the outside world in a short time. Several respondents mentioned that when they bought their first home, they were first attracted by the good looks of the building. As long as the floor layout was reasonable, they made a quick decision to purchase. As people were getting more and more aware of the outside world’s standards, those buildings which were poorly imitated were quickly abandoned by consumers. Forms of residential facade began to be included in the overall planning, focusing on close integration with the community spaces and environment. The architectural style was more and more rich, and details were more and more elaborate, which attracted buyers, and, at the same time, improved the urban landscape greatly.

Photo 4.8: “井”-shaped floor layout and other similar plans

272 Developers used various means of "stealing area" to attract buyers, which attracted the attention of the government. Many cities have revised the calculation method of building area to eliminate the use of gray space in policy by design to achieve sales highlights of the so-called "gift area". 134

Source: Mao, Wei and Wang, Xiaomo. Revolution of Living (Beijing: Haichao Press, 2000), 41-44.

Photo 4.9: duplex house in a high-rise apartment

Source: Mao, Wei and Wang, Xiaomo. Revolution of Living (Beijing: Haichao Press, 2000), 53-54.

Photo 4.10: bay-window

Source: pictures from housing sale website https://cuihaihuayuan.fang.com/ (access on 29/5/2019)

Photo 4.11: entering-garden

135

Source: pictures from housing sale website https://sz.esf.fang.com/chushou/18_217469042_18429701x2810017978_164332463.htm (access on 29/5/2019) b) Planning and Landscape Whether the floor layout of residential buildings met the requirements of comfort, safety, convenience, and health in consumers' daily life was always one of the most basic and important factors considered by buyers. Meanwhile, people began to pay attention to the living environment outside the buildings, such as greening, landscape, activities, safety, transportation, parking, and so on. Environmental demand refinement prompted developers to make many changes in project planning and landscape design. Many foreign planning theories and design methods were applied to community planning and design and became a key selling point for successful sales.

China's residential area planning followed the Soviet Union's principle, which originated from Perry's theory of “neighborhood units”. 273 The principle of neighborhood units guided the planning and construction of urban residential areas worldwide and was deepened and developed in different practices. One of the most famous practices was the construction of Radburn in 1933, a new town in the suburbs of New York. The planning of this new town inherited the tradition of Ebenezer Howard’s Garden City and applied the principle of neighborhood units. It also made appropriate improvements to respond to the increasing number of cars and traffic accidents. The practice of completely separating pedestrian traffic from vehicle traffic was called the “Radburn Principle”,274 which has been adopted by residential planning and construction in many countries. Binhe community ( 滨 河 小 区 ) was the first residential area in Shenzhen to integrate the concept of separation of people and vehicles. It connected the residential buildings by a walking corridor and separated the road under the corridor275. Although it was through simple architectural design and

273 Clarence Arthur Perry. Housing for the Machine Age. (New York: Russell Sage Foundation, 1939), 50-51. 274 Shiwen Sun. Modern Urban Planning Theory. (Beijing: China Architecture & Building Press, 2005), 325. 275 Dachang Chen. Planning of Shenzhen Binhe Community: A Real Case of Large Space Community. 136 incomplete separation of pedestrians and vehicles, People found it refreshing when it was completed in 1986. Meilin Village 276 , planned and designed by Hong Kong architect He Xianyi, was built in the late 1990s and the first large-scale community to realize the separation of pedestrians and vehicles in planning. From then on, the concept of the “Radburn Principle” was applied to many projects, which became the basic requirement of residential planning, especially meeting the concern of families with older people and children.

Since Howard put forward the theory of the Garden City and constructed the modern planning theory system, urban development in western countries applied the urban planning method, which was based on the modern architectural movement, that focused on the composition and organization of urban physical space. Beginning in the 1960s, the post-modern urban researchers reflected and criticized the American urban construction after the Second World War, and proposed that cities should be re- conceptualized and built from the perspective of urban life and human activities. Some of these ideas had far-reaching implications for China's planning and housing development, including Jane Jacobs's view of urban vitality and mixed blocks in The Death and Life of Great American Cities 277 , and New Urbanism's theory, which emerged in the 1990s. The idea of New Urbanism was put forward in view of the development of suburban areas in the United States. It suggested that suburbanization in the United States was an inefficient development model that wasted land, energy, and resources and that a single population structure led to the disappearance of urban life characteristics. New Urbanism advocated the development and maintenance of an inclusive neighborhood community whose housing could adapt to various families with different sizes, ages, cultural, and income. It placed well-equipped public facilities in the most accessible location for residents. New Urbanism’s design method included two modes, TND (Traditional Neighborhood Development) and TOD (Transit Oriented Development).

Since the late 1990s, Shenzhen began to expand rapidly to Nanshan District and Bao'an District. With the development of large-scale residential communities, the theory and method of New Urbanism were appropriated by many developers. Some referred to its planning methods and more to the ideal of reviving the lifestyle of traditional European small towns as a marketing promotion. Shekou Industrial Park,

Urban Planning Society of China, ed. City Planning Review, No.06 (1985), 20-24. 276 Meilin Village is located in the south of Meilin Reservoir in Futian District. It is a large-scale small-profit residential area developed and constructed by Shenzhen Residential Bureau. It covers a land area of 38.38ha, with a total building area of 747,600 square meters, GFA 3.5 and a greening rate of 46%, and a total of 2,910 parking lots. A total of 13 districts in Meilin village are high-rise buildings. Each building is overhead at the first floor and duplex at the top. With high standards of planning and design, high quality construction and high level of property management, Meilin Village is known as "the first village in Asia". 277 Jacobs questioned all the academic approaches and argued that urban renewal did not respect the needs of most city-dwellers. She observed and analyzed the day-to-day street life and a wide variety of neighborhoods in many American cities to find out that the environment, which promoted frequent communication and activities, could produce the value that all people needed. She put forward four factors critical to the healthy development of a city, which are primarily mixed land use, small blocks, a mix of building ages, and concentration of urban activities. See Jane Jacobs, The Death and Life of Great American Cities, (Harmondsworth: Penguin Books, 1964). 137 which put forward and practised the concept of "comprehensive community development", was a successful case that fitted Jacobs' viewpoint and New Urbanism's theory. Compared with many super-large communities which were only built as gated "dormitory towns", Shekou Industrial Park was a truly multi-functional and mixed community, which realized the integration of urban functions and had the characteristics of cultural symbiosis, scale economies, and social coordination. 278 While Seaside Florida, the representative project of New Urbanism, was planned and constructed in a short period, Shekou Industrial Park was a natural growth process. As the earliest construction area in Shenzhen, its formation was influenced by many complicated political and economic factors. Thanks to Yuangeng’s adherence to the idea of building the most livable coastal town, Shekou became a desirable place where many Shenzhen people chose to work and live (see photo 4.12). Several respondents had been working and living in Shekou since they first came to Shenzhen in the 1980s. Shekou Industrial Park provided them with job opportunities, dormitories to live in, affordable small-profit houses and optional commercial houses. Their children were born and raised in Shekou. All schools, from kindergarten to high school, were built and run by Shekou Industrial Park, and were within walking distance. There were also hospitals, commercial and cultural facilities to meet their needs in health, shopping, cultural and leisure entertainment, and other needs of daily life. They chose to live in Shenkou throughout their lives.

Shekou’s development mode was formed in a specific period. A similar development in Shenzhen was the Overseas Chinese Town, which also originated from the acquisition of large-scale land and independent development power during the initial development period of Shenzhen. Most developers did not have such conditions and opportunities to conduct development in a scale of a new town. Most projects only provided commercial housing and corresponding service facilities. To label themselves as the New Urbanism, these projects mainly imitated its public open space, pedestrian system, spatial layout, architectural style and so on, and then combined exquisite pictures and words in the brochure to promote a more humanistic lifestyle. Some smarter developers, such as Vanke, fully integrated with the city in space, facilities, transportation and other aspects of planning (as detailed in chapter 3) to achieve the effect of enjoying both a beautiful and private residential environment and a dynamic urban life, rather than a gated “urban isolate island”.

In addition to planning concepts, landscape design and construction of residential communities were also important means for developers to meet the consumers’ upgrading environmental needs. Although there were some famous gardens in Chinese history, such as Suzhou Garden and Beijing Royal Garden, before the 1990s, few Chinese universities offered landscape architecture as a specialty, and there was no landscape designer position in design companies. People's understanding of

278 Zheng Hu, Shaobin Lin, Xinzhi Lu, ed. The China Merchants and China’s Real Estate Industry (Beijing: ZhongHua Book Company, 2010), 173.

138 landscape was limited to urban parks, greening, and planting. The code of residential area planning stipulated the proportion of green land in a residential area. As long as the green area with grass and trees could meet the requirements, the residential community met the national standard.

By the mid-1990s, when people's demand for residential buildings was met, they began to pay attention to the living environment outside the door. People could not be satisfied with simply laying lawns and planting trees in the open space of the community. When there were few native landscape designers in China, landscape design companies from Hong Kong, Europe, and the United States quickly became hot resources for real estate development. All spaces outside the residential building became the scope of the landscape. Landscape design first needed to coordinate with the style of planning, architecture, and sales, then to consider people's outdoor activities to arrange different hard and soft landscapes, also to consider seasonal factors with different colors of plants, and so on. The landscape was not only a topic to be considered at the beginning of a project, but also a key selling point. Various sales advertisements made people intuitively understand how developers created a living atmosphere through landscape design and sold a designed lifestyle to consumers (see photo 4.13). Exquisite pictures and gentle or exciting words stimulated consumers' senses and aroused their yearning for a better life. The beautiful and stylish landscape could attract consumers in an instant and make the purchase more likely. However, in the interviews, the respondents' requirements for the living environment were safety and hygiene first, and then friendly neighbors and beautiful landscape, which indicated that, in the long-term everyday life, the most important factors in a community were safe, hygienic, practical, convenient conditions, and friendly neighborhood relations, rather than the style of the landscape.

Photo 4.12: images of Shekou Industrial Park

139

Source: photos were taken in the field research in 2017 and 2018.

Photo 4.13: using landscape as highlights of sales promotion

Source: Shenzhen Real Estate Association, ed. Classical Properties Advertisement (Shenzhen HK Guangzhou). (Nanchang: Jiangxi People Publishing House, 2002), 44,45,57. c) Cultural and Humanistic Environment

140

When the physical elements of architecture and landscape were met, consumers had a new pursuit, that was, cultural and psychological needs, which were often vague and would change at different stages of life. This higher level of requirement could be summarized as social stratification, emotional attribution, and ideal home. From the perspective of housing and community research, social stratification was the stratum represented by the community and neighborhood, emotional attribution referred to the sense of community identity and belonging, and ideal home referred to the ideal living space and style. These aspects were not separated but overlapped to varying degrees.

After the implementation of reform and opening-up policies, China has developed into a stratified society. There is a great disparity between the rich and the poor in Chinese society at present, which is particularly evident in the expensive commodity of housing. The rich often have more than one house, and the poor cannot afford even a room. All respondents put the housing price as the first consideration. Consumption ability must be met before other requirements could be put forward. However, I did not fully agree with the opinion that the widening income gap led to social strata stratification, and then transformed into residential differentiation279. It was obvious that wealth as the most important factor, has led to social stratification and the resulting differentiation of living space in American cities. Poor people were concentrated in urban centers, while the middle class and the wealthy chose to live in the suburbs. Unlike urban development in the United States, Shenzhen has no obvious downturn in its central area and the process of middle-class migration to the suburbs. Apart from wealth, there are other equally important reasons for the differentiation of living space in Shenzhen. From the process of Shenzhen's urban development, the early Futian District and Nanshan District could be understood as the suburbs of Luohu District, while the districts outside the Second Line (today's Bao’an, Longgang, Longhua, etc.) could be understood as the suburbs of the area of inside the Second Line. When people chose to buy houses in Futian District and Nanshan District, or Bao’an and Longgang afterward, it was not because of the decline of Luohu District or the areas inside the Second Line. They moved to other districts not for better living conditions, but in order to get closer to work to reduce the time and cost of commuting every day, or because the same amount of money at that time allowed for larger housing in those new development zones.

Unlike the American mode that residential communities spread to the suburbs, the development of Shenzhen was the demand for capital expansion and industry development preceded residential construction. Shenzhen formed different centers through industrial development and then developed residential and other supporting facilities around new centers. Every district in Shenzhen mixed with old buildings, urban villages, and new residential communities. Shenzhen presented a highly mixed development. Walking on the streets of Shenzhen, there might be new high-end communities on this side of the road, while on the other side there were dense urban villages. Therefore, the differentiation of living space in Shenzhen occurred in every

279 Guangjin Chen. Housing: The Landmark of Social Class. Quality: Brand, No.01 (2003), 25-27. 141 small area, distinguished by the walls and gates of each residential area.

In Shenzhen, the housing differentiation caused by wealth only occurred at the top level, that was, families who bought the most high-end houses with good natural resources could be identified as the richest families. The purchase of other normal commercial housing could only show that the buyers’ wealth was affordable to the price of the house, but it did not mean that their wealth was similar. People with different wealth and occupation chose the same community for different reasons. After removing the price factor, that was, on the premise of affordable housing prices, respondents considered different factors. The top ones were children's education, working distance, house layout, internal and external environment of the community. It could be seen that when they bought a house, mostly in the 1990s and 2000s, they considered location, transportation, and the house itself rather than any cultural and humanistic factors. But when it came to their desire for housing and living environment for their next new house, they mentioned more humanistic factors, such as the accomplishment of neighbors, neighborhood relationship, cultural atmosphere, and so on.

The 40 years history of Shenzhen was quite different from those historic cities, like Shanghai and Guangzhou, where the temperament of each district had already been formed in history. The social stratification and value of each district had been rooted in the minds of most local people. When Shanghai Pudong New District was still undeveloped, there was a saying that one would rather have a bed in Puxi than a house in Pudong, which highlighted the established social stratification and regional value. Therefore, when buying a house, people in these cities would first choose a suitable area for themselves or the area they desired.

Home-owners in Shenzhen chose to buy houses mostly based on their conditions and the needs of the floor layout and community environment at that time. Now people who planned to buy another house began to pay attention to their needs of the cultural environment. This upgrading housing demand was obtained from the past living experience. People gradually knew at what level they were more comfortable in their residence and what kind of residential atmosphere promoted them with more sense of identity and belonging, and then they could sum up their requirements for the ideal home. Several respondents living in Futian District said they would like to stay in Futian even if they planned to move their house, because "it took us more than a decade to wait until finally all the facilities in Futian District were completed and mature. Thus, we were reluctant to move to a new district boasting a promising future even if the house price was cheaper there. This kind of cultural atmosphere will not be formed in less than ten years.” Several respondents experienced living in several districts, believing that Luohu District was the most lifelike and humane place, so they chose to live in Luohu for a long time. Some other respondents preferred communities in districts outside the Second Line, which were new and large, and cheaper with more potential for development. Each person formed different feelings for different districts in their

142 living experience. Overall, respondents born in the 1960s and 1970s tended to stay in the areas inside the Second Line, namely, Luohu, Futian, and Nanshan, while those in the 1980s and 1990s thought that living outside the Second Line was also acceptable as long as the facilities were perfect.

Based on interviews, it discussed the iteration process of Shenzhen housing development from architecture to community planning and landscape, and also explored the process of Shenzhen people's demand for housing from material factors to cultural needs. In the process of living in different communities, Shenzhen people not only summarized and clarified their needs for housing but also involuntarily participated in the remodeling of Shenzhen's living space in their daily life, which helped to form the humanistic charateristic of different regions.

4.2.2 Space Reshaping Michel de Certeau suggested that space was a practiced place. The street geometrically defined by urban planning, was transformed into space by walkers280. Likewise, houses and residential areas were built by the government or developers, which were only places. After the houses were allocated to employees or bought by consumers, they became meaningful spaces through the residents’ practice. In Lawrence’s words, that was to make a house a home, which was a complex entity that defined and was defined by cultural, sociodemographic, psychological, political, and economic factors281. After residents moved in, in the process of using the public space and facilities of a residential area, the unique “propriety”282 of the community was formed, which made a built place a community space shared and maintained by all residents. If a consumer purchased a second-hand house, he/she often transformed the house into a space suitable for his/her family through decoration and transformed the space of others into his/her own space through residential practice. In terms of community space, the already inhabited community was a space with established meaning. For new arrivals, they should observe, learn, and adapt to the community propriety to integrate into the new space. At the same time, their use of community space and facilities might also bring some new elements to the community, causing some, maybe minimal, changes.

Unlike French residential community described by De Certean in the 1970s, which was an open residential block, the Chinese residential area was a residential space with fences and entrance guards. Each community was developed by different developers and handed over to the property management company for management and operation after the sale. Therefore, compared with urban public space, housing was a private space, while community space was a semi-public and semi-private space

280 Michel de Certeau. Translated by Rendall, Steven. The Practice of Everyday Life. (Berkeley: University of California Press, 1984), xxi. 281 Roderick J. Lawrence. What Makes a House a Home? Environment and Behavior, Vol. 19 No. 2, March 1987. 155. 282 Michel de Certeau, Luce Giard, Pierre Mayol. Translated by Tomasik, Timothy J.. The Practice of Everyday Life, Volume 2: Living & Cooking. (Minneapolis: University of Minnesota Press, 1998), 19.

143 between them as it was only used by people in the residential area. Housing and community spaces were the carriers of people’s everyday life. People were constantly reshaping spaces in their practice of everyday life, adjusting their behaviors, and expressing their demands. Residents' reshaping of living space included the reshaping of the house and the community. Diagram 4.1 showed how people changed the housing and community from places to spaces in their everyday life.

Diagram 4.1: space reshaping model

a. Spatial Separation in Early Residential Buildings In the early stage of Shenzhen's housing development, according to the descriptions of interviewees who came to Shenzhen in the early 1980s, houses were only some independent buildings, the community and supporting facilities had not yet formed. Everyone lived in the humble collective dormitory and family dormitory, so at that time, people's transformation of space was limited to the interior space of the room. Although space was limited and the conditions were simple, people could still find a compromise in the limited space to meet their needs. Whether in a dormitory or a family home, everyone was eager to have a private space. A worker's dormitory usually housed eight people, and the bed was the only private space. Many workers, especially females, used curtains to surround the bed to form their own closed private space, turning a piece of board on the bed into a bookshelf and tabletop, stretching a rope for hanging clothes, spreading a cloth on the bed to make a visitor’s seat. A space of 1 m*2 m was changed from sleeping space to the living room, study, and bedroom (see photo 4.14).

In the family dormitory, a family’s life was usually arranged in a room. Because the structure and age of family members were different, families had different ways of using space. One interviewee described in detail the embarrassing period in which five members in three generations of her family lived in one room for six months. Their dormitory was one bedroom in a three-bedroom suite-house, sharing kitchen and bathroom with the other two families (three members in each family). In the beginning,

144 only the couple lived in the room which was quite spacious with a queen-size bed, a wardrobe, and a table. Moreover, the couple went out early and returned late and seldom ate at home, so sharing the kitchen was not a problem. Sharing the bathroom was not very convenient, but it was still acceptable. Later, her son came to Shenzhen for a reunion with his parents and going to school. As the couple often needed to work overtime and travel on business, the grandparents had to come to take care of their grandson. Not to mention the busy situation of 11 members of the three families sharing a kitchen and a bathroom, their room was already very crowded with five people. Upon the arrival of her parents and child, she bought a bunk bed (1.2m lower bed and 1m upper), and the queen-size bed was moved next to the window. But the child was eight years old, and he was unwilling to squeeze into a bed with his grandmother. So she bought a folding mattress, which was laid on the floor at night for her son, and put it away during the day. It was finally unbearable after squeezing in like that for half a year. She gave up her dormitory and rented a two-bedroom suite-house. Although it cost extra money, the quality of life was greatly improved, and her mood was good every day.

The families living in family dormitories for a long time usually did some fixed space separation. First of all, wooden boards or curtains were used to separate the room as a bedroom and a living room. The living room was a space with different functions according to different periods. It was a dining room when eating, a study room when children were doing their homework, and a sitting room when guests were visiting. Some families even set up a small kitchen in the corner of the living room to avoid crowding in the shared kitchen. Families with a child needed to separate the bedroom according to their child's age. When the child was young, they usually shared a space. The growing-up child would ask to separate his/her sleeping space to keep a little privacy. If there was more than one child in the family, or with the elderly living together, it usually needed a bunk bed to solve the problem. Personal privacy space was narrowed down to a bed’s space. And “family members had to renegotiate with one another regarding not only the use of space but also the maintenance of intrafamily relations”.283 At that time, there was no concept of a residential community, but there were still public spaces, such as corridors, which connected every room, stairs, and public bathrooms and kitchens. The corridor was usually used to hang clothes, and the corridor space around each room’s entrance was usually diverted to store debris, place a bicycle, or even set up a simple kitchen. The privatization of public space was a common phenomenon at that time. It was also a tacit acquiescence of mutual understanding under crowded living conditions.

These were not unique phenomena in Shenzhen, but very common in other part of China in the early period of reform and opening-up, which was exactly the housing conditions in China as already described in chapter two. It could be imagined when Shenzhen provided suite-houses, how exciting this was for Chinese people who were

283 Yan Yunxiang. Private Life Under Socialism Love, Intimacy, and Family Change in a Chinese Village 1949-1999. (Stanford: Stanford University Press, 2003), 131. 145 accustomed to bearing the crowded and privacy-deprived living conditions. Only after the housing commercialization, did Chinese people have their private living space, which could be used according to their ideals.

Photo 4.14: reshaping a bed space

Source: sketch based on the description of the interviewee. Photo from website. b. Decoration For a commercial house, the developer provided standard and designed layout, normally, with two types of delivery standards, un-finished house, and finished house. An un-finished house was a house that living spaces were delimited, such as living room, dining room, bedroom, kitchen, and bathroom, and all pipe connections were made, but without sink, faucet, or other fixtures and end elements. Buyers needed to renovate and decorate the house after the delivery. Many people would redesign the layout and the wiring on the premise that the structure was safe. Therefore, the houses delivered as un-finished houses would present completely different standards and styles after being decorated by different buyers. A finished house had decoration finished according to the standards set by developers. Buyers only needed to buy furniture and electrical appliances to move in. Some buyers did not alter the layout and decoration of the house at all but added some ornaments. Some buyers were not satisfied with the standard decoration and redecorated the house.284

284 A finished house generally has different decoration standards for buyers to choose, with different decoration prices. Developers unify purchase of building materials and unify decoration construction, which is more conducive to environmental protection, and avoids the interference caused by each family’s decoration after the delivery. A finished house is very popular with dual-worker families who do not have time to do decoration. They generally express their personalized pursuits through ornaments and furniture. The disadvantage of finished house is lack of personality, which is not favored by some consumers. Redecoration of finished houses is a great waste and produces many construction waste. Developers generally do not allow buyers to carry out secondary decoration, especially in the industrialized housing, 146

Buyers’ reshaping of living space usually began with the decoration and ornament of their houses, which was the process of personalizing the house. Buyers needed to adjust the floor layout because of family structure and age or to create some special spaces for living habits or hobbies, such as study, gym, children's playroom, bar and so on. Different decoration standards led to great variations in cost of decoration materials, lamps, furniture, electrical brand, etc., which reflected the economic strength of families. The decoration style reflected the buyer's hobbies and tastes. For example, some people liked magnificent European style, using complex ceiling and wall lines, gorgeous stone paving, and matching with shining crystal chandeliers and European- style furniture with complicated details to create the feeling of European aristocratic life. Some people liked traditional Chinese style, such as screen, mahogany furniture, and some others chose a simple modern style. Property management companies would not interfere with the household decoration as long as the decoration did not endanger the building structure, affect neighbors, and litter construction waste.

House decoration was a process in which the consumer showed his/her individuality completely and independently. It not only met the needs of life but also satisfied his/her aesthetic taste and realized the individual's living ideal. But housing decoration was also subject to various constraints, such as the buyer's economic capacity, the market for available decoration technology, materials, household appliances, furniture and so on. In decoration style, unless the buyer had a strong personal hobby, most of them were influenced by the prevailing decoration style. The house decoration was a process of constantly listening to the enthusiastic suggestions from designers, friends, and other families, comparing the market supply and prices. The individualization of housing implied the prevailing residential culture and the level of economic development at that time. c. Dwelling Practices The residents’ practices did not stop here. It was through the dwelling practices that the construction of a home could be completed in the daily use and running-in. The dwelling was the most individualized practice. Everyone was unique in using space and placing personal items. A place inhabited by the same person for a certain duration drew a portrait that resembled this person based on objects and the habits that they implied.285 When children grew up from babies to teenagers and then to young people, their rooms were constantly changed, not only the size of the bed, desk, and chair, but the furnishings on the desk, paintings on the walls and books on bookshelves. Children who used to like to get into their parents' beds suddenly preferred to stay in their rooms with the door closed and loudly play the music that their parents couldn't understand.

The most typical example was the “fighting” for the kitchen. The prosperity of a family as many walls, pipelines, fixed decoration are integrated. If necessary, secondary decoration needs to be approved by developers and designed and constructed by professional companies. 285 Michel de Certeau, Luce Giard, Pierre Mayol. Translated by Timothy J. Tomasik. The Practice of Everyday Life, Volume 2: Living & Cooking. (Minneapolis: University of Minnesota Press, 1998),145. 147 was expressed first in its daily diets.286 China had a long dietary culture. The dietary habits of each region are different. The ingredients and condiments, cooking tools and methods required by different cuisines varied greatly. Shenzhen was an immigrant city, where people from different regions formed families. The most important but difficult thing to reconcile was eating habits. According to the questionnaire survey, in Shenzhen families, the “elementary, conventional, and pedestrian” task of buying food and cooking was no longer the job only for women, which was helped by parents, or shared by the husband and the wife, or assigned to helpers (see figure 4.4). If husband and wife from different province cooked in turn, the kitchen would have cooking traces of different cuisine and different people. For example, if the wife wanted to cook Sichuan cuisine, spicy seasonings were placed prominently on the pantry. When the husband who wanted to cook Shanghai cuisine took over the kitchen, Shanghai cuisine seasonings hidden in the cabinet would be put out, and all other tools would also be adjusted to the husband's habitual position. When another person cooked, the adjustment would be gone through again. But over time, cooking in a family was slowly compromised, with couples accepting each other's way of eating, or trying other dishes which were tried when eating out, then brought back to practice at home. Because of the free flow of people, goods, and information in modern society, people were willing to try new things. They were more inclusive of other cultures, especially diet. Pluralism and inclusiveness permeated in every aspect of everyday life in Shenzhen.

One respondent pointed out that when she decorated the house, because she and her husband seldom cooked at home, she made the kitchen into an open kitchen, connecting to the dining room, which made the dining space look big and matched her western simple style. After having a baby, the grandparents came to take care of their grandchild. They cooked at home every day, and they liked to cook Sichuan cuisine, which made the smell of pepper and chili spread throughout the house. They had to install a partition between the dining room and the kitchen, and also installed a more powerful kitchen ventilator. There were many similar examples. The problems of residential space, especially the details, were always found after use. Over time, the structure of the family population changed, and the living space needed to be adjusted accordingly. A family was always in constant adjustment to adapt to its members’ needs of daily life.

Developers also paid more and more attention to the study of needs in the daily life of different family structures in order to solve more problems in the design stage and launch more selling points in the sales stage. For example, many people liked the open kitchen, but because most Chinese cooking methods were smoky, they had to abandon the idea. So some developers designed a special kitchen, which was divided into two parts, one was the closed cooking area, the other was open and connected with the dining room. At first, the design was very popular. But after practical use, it was found that the cooking area needed to connect with other areas, such as the sink, refrigerator and so on, to facilitate the cooking. The households had to move the

286 Ibid. 152. 148 partition to between the kitchen and the dining room. Later, in some large-scale house design, there appeared double kitchens, a closed Chinese kitchen for stir-fried dishes, a Western kitchen open and connected with the dining room, mainly for the sake of a good space. In such a small space as a house, “the design, the meaning, and the use of home interiors are intimately related to a range of cultural, sociodemographic and psychological dimensions.”287

Figure 4.4: buying food and cooking in Shenzhen families

BUYING FOOD

3.70%

13.60% 17.30% 1.20% 17.40% 14.80%

32%

helper mother father parent wife husband the avaliable

Source: based on the data collected by my survey from 2/2018 to 2/2019. d. Reshaping Community Space Reshaping the space inside the house was an individual behavior, while the reshaping of the public space in the community was the result of the public daily life practice of all residents. Pierre Mayol defined the neighborhood as “mastery of the social environment,”288 and “an object of consumption that the dweller appropriates by way of the privatization of public space.” 289 These were good approaches for a neighborhood in an open block. However, the Chinese residential areas discussed in this chapter needed another explanation. According to clause 73 of the Property Law of the People's Republic of China, roads, greening, public facilities and service houses in residential areas were common properties of all owners. Therefore, when purchasing a house in a gated residential area, the owner was granted the right to use these spaces, while the owner had to pay property management fee monthly to maintain the normal operation of public facilities and spaces. Households acquired facilities, space, and services through purchase, so space practice in the community was a kind of consumption paid in advance, not aiming at “according the maximum of time to a minimum of space in order to liberate the possibilities for wandering about.”290

287 Roderick J. Lawrence. What Makes a House a Home? Environment and Behavior, Vol. 19 No. 2, March 1987. 155. 288 Certeau, Michel de, Giard, Luce, Mayol, Pierre. Translated by Tomasik, Timothy J. The Practice of Everyday Life, Volume 2: Living & Cooking. (Minneapolis: University of Minnesota Press, 1998),9. 289 Ibid. 13. 290 Ibid. 149

Although dwellers had the right to use them, these spaces and facilities were still public and common to all households. Thus, a community was still “a collective organization of individual trajectories,”291 in which the practice is “a tacit collective convention, unwritten, but legible to all dwellers through the codes of language and behavior.”292 These codes were named “propriety” that every dweller was subjected by it to collective life. 293 When interviewees described the community they lived in, they usually included several aspects, such as safety, hygiene, landscape and environment, and neighborhood. In the questionnaire survey, gardens (lawns), small shops and fitness equipment (including swimming pools and children's playgrounds) were the most frequently used by dwellers in communities, while dwellers were most concerned about the safety, hygiene and neighborhood relations in residential areas. All respondents agreed that property management companies were responsible for maintaining the safety, the cleanliness, and normal use of public facilities and spaces of communities, which were services they should receive when they purchased houses and paid management fees. They also agreed that if the property management company could not meet the requirements of the residents, they had the right to change the property company. There were many owners' rights protection incidents in recent years in Shenzhen in which the owners of a community jointly terminated the contract with the property company. At the same time, most of the interviewees mentioned the accomplishment of people. That was to say, most residents realized that dwellers’ dress, behavior, way of occupying and using spaces, and communication with others in public all affected the construction of the overall image of the community. Compared with the role of property management, propriety was the hidden force to maintain the harmony, attraction, and civilization of a community, which determined the degree of civilization of a residential area. As Wang Shi’s impressive sentiment expressed, only the spirit could keep a community alive vividly.294

The limitation of "environmental determinism"295 has been recognized. People had generally accepted the interaction between human and environment; that was, the environment created humans, while humans also created an environment. Designers and developers designed and built the physical space of a community, and property management companies maintained the space. But it was only with dwellers’ activities, that space was complete. Material space had a certain restrictive effect on people's behavior, so people had the most basic consensus on the behavior of public space. Due to the different residents, each community formed propriety with its characteristics, which could be understood as the common signature of community dwellers. Expressed in the plainest language of the respondents, that was this community had a strong cultural flavor, and the accomplishment of people in that community was not

291 Ibid. 15. 292 Ibid. 16. 293 Ibid. 19. 294 Shi Wang. The Way: Vanke and me 2000-2013 (Beijing: CITIC Press, 2014), 133. 295 Environmental determinism is one of the main western viewpoints on children's psychological development from the end of 19th century to the beginning of 20th century. It holds that human behavior and psychological development are entirely determined by the environment. The representative is J Watson, the representative of American psychologist's behaviorism. 150 good. Similar cultural literacy and similar requirements for living space shares by most dwellers would promote the formation of propriety or produce resonance in a residential area, and then produce a sense of pride and belonging to the community. Taking Liangzhu Culture Village in Hangzhou as an example, it was Vanke’s model project of "Three Good Communities." Vanke built many cultural facilities in this project, including a special training college for older people, a play and adventure center for children, a villagers' study, a cultural and art center, and a church (Meili Zhoutang). The most prominent thing was that on February 27, 2011, after two years of consultation, discussion, and revision, the Villagers' Convention, which was agreed by 3653 dwellers, was formally issued. In a total of 26 clauses of the Convention, they did not use words like prohibition but used words such as our initiative, our advocacy, and other words to stimulate self-discipline, which were full of residents' vision of ideal life. The Convention was initiated by dwellers and became a code of conduct for all dwellers to abide by.296 The residents themselves created the atmosphere of this idealist, full of pride and belonging to the community. These cultural facilities and cultural atmosphere attracted more people with the same cultural aspirations to buy their houses in this community.

When a respondent was asked if he had a plan to buy another house, he said that he had bought a house elsewhere, but he didn't want to move. He has lived in the current house for seventeen years. Although the environment of the old community was not very good, the neighbors knew each other, which made him have a sense of security. The sense of security for a community came not only from security equipment of the community and security measures of the property management company but also from the common defense of residents. When people had a sense of pride and belonging to the community they lived in, the community space became a "defensible space". That was, the sense of pride and belonging was transformed into a sense of responsibility for the safe, effective, and good management of good living space.297 They were unconsciously suspicious and vigilant of strange faces and unreasonable behavior in the community. When dwellers took the maintenance of community security as their responsibility and consciously safeguarded the security, not only the security of the community was improved, but also the internal links of dwellers and the community were strengthened.

Vanke conducted community surveys with the outcome that if a dweller knew fewer than 12 neighbors, the management company had the responsibility to organize activities to make them know each other. It indicated that the construction of a community first needed the mutual recognition of residents. In the questionnaire survey, 60% of the respondents knew only a few neighbors, 20% did not know even one

296 Lijuan Liu. Vanke 30 Years: Product and Marketing (Beijing: China Architecture & Building Press, 2016), 99. 297 Oscar Newman conducted a systematical research by linking households and residential areas with criminal behavior and psychology. He proposed the concept of ‘defensible space’. for more information see Sun Shiwen. Modern Urban Planning Theory. (Beijing: China Architecture & Building Press, 2005), 336-337. 151 neighbor, and only 20% said they knew a lot. Those who knew nobody were single dwellers who temporarily rented a house. They thought it unnecessary to know people for a short period of staying anyway, so they stayed in their house every day after they went home and did not participate in any activities in the community. The residents who knew a lot of people were usually those who lived longer in the community or had children and older people in their families. It was understandable that living for a long time and having more chances made it more natural to meet more people. But it was an interesting thing that most respondents said that they knew other dwellers of the community only because there were older people and children in their families, which raised a new question: who was the real user of the community space? From another point of view, the question was, who should be considered more when developers designed and built communities?

Shenzhen was the youngest city in China, with an average age of 33 in 2018. In the 1980s and 1990s, the average age was in the twenties. At that time, one saw people working in a hurry, but not so many children and older people in Shenzhen. However, the situation already changed in the past decade. In today's communities the following scenario took place. In early morning, old people (including a small number of young and middle-aged people) did exercises. Around seven o'clock, school children and workers rushed to schools or stations, and some private cars drove out of the garages. At eight to nine o'clock, old people, or full-time mothers, or nannies went shopping or took children who were not yet in kindergarten age to play in gardens. Students came from schools and played downstairs, moments later, they went home for lunch. At two o'clock, the students went to school again. At four to five o'clock, students left school. Some students continued to attend extra-curricular classes. Some children played in the open spaces of the community. Older people chatted, or played chess, or played other activities in groups, and they picked up the children or watched the children by the way. After dinner, some people came out for a walk or play. Shenzhen was still a fast-paced city. Most families were double-employed. The family and children depended on the care of older people and nannies. Even if the wife resigned to take care of the children at home, they usually hired helpers to do housework. Young and middle-aged people had a strong ability to travel by themselves, driving, or taking public transportation. Their activities and social activities could go far beyond the community. For them, the house and community were mainly a place to rest at night. Therefore, it was mainly the elderly and children who stayed in the residential area for a long time. They used community space, exchanging family information, and establishing contacts. Young and middle-aged people learned about daily events of the community through descriptions of the elderly and children. In addition to the principle of proximity enrollment, children living in a community often went to the same school, so they were both neighbors and schoolmates. Over time, the parents also knew each other because of their children. The interesting thing was that the parents called each other by their children’s name, such as Ming’s father or Fang’s mother. Because the parents were identified by the children, the children were considered to represent the parents and families. Therefore, the parents required the elderly and

152 children to have decent clothing and speech that could represent the family in the community. Propriety in the residential area was shown through the elderly and children, but behind it was the acquiescence of families.

Shenzhen people did not pay much attention to the community space when buying houses in the early stage, as long as space was relatively open and greening was well done. With the birth of children and the arrival of older people, Shenzhen people began to express concern over whether there were any facilities for the elderly, and any spaces suitable for older people’s leisure and children’s games, and whether there were high-quality resources for children’s education. The Chinese culture of supporting the elderly, caring for children, and sharing the joy of family ties was deeply rooted. With more and more families choosing to settle in Shenzhen, developers were certainly aware of this shift in consumers’ demand. As long as the problem of children's education and aging people's care in a family was solved, the family's worries were almost solved. Therefore, many developers used the provision of high-quality schools for children, and safe and convenient facilities and environment for the elderly as selling points, which is discussed in the next chapter.

4.2.3 Conclusion The layout design and quality of the housing and the community are always the most important factors to be considered when people decided to buy a house. With Shenzhen people's understanding and demand for housing ranged from blank to pursuit of high-quality buildings and landscapes, to the construction of an ideal home with a sense of pride and belonging, Shenzhen's housing and community experienced an iterative process from architectural design and construction quality to community planning and landscape, and to the formation of a humanistic community. Meeting the needs of home buyers and dwellers was an important driving force for developers to constantly adjust residential products and improve the quality of buildings and community environment.

4.3 Transportation Development

Apart from the quality of housing and community, another important factor affecting buyers' choice of a house is traffic conditions. Transportation is a way to connect cities and various places and facilities within a city. The purpose of people using transportation is to travel from one place to another, realizing the spatial transfer of people, goods, and information. Since the city appeared, the expansion of urban space was mostly based on the development of transportation. At the beginning of the reform and opening-up, Shenzhen was selected as SEZ largely because of its geographical advantages with Hong Kong, i.e., its convenient transportation with Hong Kong. SSEZ first developed Luohu District and Shekou Industrial Park also because of their transportation advantages. At that time, both the only entry port to Hong Kong and the only railway station of Shenzhen were in Luohu. Shekou Industrial Park was very close to Hong Kong, Guangzhou, Zhuhai, and Macau by waterway. Therefore, Shekou Port

153 was put into construction since 1979, and it started operation since 1980, which solved the problems of freight and passenger transportation in the early stage of Shekou Industrial Park. Transportation itself is a huge research topic. This section only discusses how Shenzhen's public transport development closely related to residential development and people's daily life.

4.3.1 Development of Public Transportation in Shenzhen Interviews showed that traffic congestion was one of the main reasons for people's dissatisfaction with Shenzhen, ranking second only after housing prices. Because of traffic jams, many people chose to travel by public transit even if they had a private car. As far as commuting was concerned, 42.5% of them chose bus and metro (see figure 4.5). Most respondents spent less than an hour on a single commute, and the tolerable limit for a single commute was one and a half hours. Apart from the reasons for traffic congestion and parking difficulties, the most important reason for people to choose public transport was that Shenzhen's public transport system was convenient and well- equipped. The Report on the Analysis of Big Data of Public Transport in Major Cities of China in 2017 pointed out that comprehensive analysis based on rail transit index, basic indicators of public transport and other dynamic indicators revealed that Shenzhen's public transport service index ranked the highest in China at 0.756, higher than Guangzhou's 0.641, Shanghai’s 0.641 and Beijing's 0.595. The 500-meter coverage rate of Shenzhen's was 91%, which was the only city with more than 90%.298 In the questionnaire, the respondents' answers also reflected similar information. Among the scores of public transport and facilities, the majority were excellent (4 and 5 points). Among them, the convenience, and the comfort, cleanliness, and safety of facilities were more rated than 70%; and the transfer time, waiting time, congestion and convenience for information were more than 50%. The most needed improvement was convenience for the disabled, which was only 42.2% (see table 4.1-4.2).

It was hard to imagine that forty years ago, the development of public transport in Shenzhen was almost blank. Wu Songying described the first day of his transfer to Shenzhen in 1981. At around 15:00 on July 18, he came out of the , but he could not find a bus. Two men who were dressed like peasants told him that there was no bus in Shenzhen and they could send him to the government office by their bicycles. Because Wu had baggage, two bicycles were required, which would mean a charge of a total of ten yuan. Wu thought it was too high as his monthly salary was only 60 yuan at that time. Meanwhile, he worried about his safety upon his first arrival. Thus, he turned down the offer. Later, he came across another young man who was also going to report to the government office. They decided to walk together to the

298 The Report on the Analysis of Big Data of Public Transport in Major Cities of China in 2017 was sponsored by Gaode Map and published in cooperation with the Academy of Science of the Ministry of Transportation (Key Laboratory of Intelligent Transportation Industry in Urban Public Transportation / Data Application Center of Integrated Transportation), School of Transportation Science and Engineering, BeiHang University. The rail transit index includes the density of rail transit network and the link-up ratio of rail transit. The basic indicators of public transport include the 500-metre coverage rate and the network coverage rate. Other dynamic indicators include opening level of public transport, walking distance and transfer times. 154 office. It took them more than half an hour walking, and it was almost 18:00 when they arrived at the destination299. According to the file of Shenzhen Transportation Bureau, the first bus line in Shenzhen was set up in 1975. The first bus departed from Qiaoshe (侨社) in Shenzhen Town, Bao'an County to Dongmen (东门) Bus Station. This bus was run by Shenzhen Town Bus Company of Bao’an County, which was a collective ownership enterprise, and also the predecessor of Shenzhen Bus Group Co., Ltd.300 According to the statistics of public transport, there were six operational bus lines in Shenzhen in 1981 (see table 4.3). It was estimated that there were too few operating buses, and Wu did not find them, or there was no bus line where Wu was heading, which could not be confirmed now. But in any case, it indicated that the starting point of Shenzhen's public transport development was very weak. In the 1980s, Shenzhen's development was almostly confined to Luohu District and Shekou Industrial Park. Many people rode bicycles or walked, and the demand for public transport was not high. Therefore, the government-monopolized public transport services adopted in Shenzhen did not appear to be a problem. However, since the end of the 1980s, Shenzhen's population grew rapidly, and the scope of urban commuting expanded rapidly from Luohu to Futian and Nanshan. The original public transport service was insufficient to meet the rapid growth of public transport demand.

Figure 4.5: questionnaire data for commuting mode

Commuting Mode

20.0%

37.5%

42.5%

drving a car public transportation walking

Source: based on the data collected by my survey from 2/2018 to 2/2019.

Table 4.1: questionnaire data for public transportation public transport riding transfer waiting score crowding convenience convenience time

299 Songying Wu. The Hardships and Splendor of Shenzhen (Guangzhou: Guangdong People’s Publishing House, 2015), 39-42. 300 For more information, see http://jtys.sz.gov.cn/zwgk/jtzx/gzdt/qt/201808/t20180823_13962030.htm (access on 27/6/2019)

155

1 2.2 4.4 8.9 6.7 2 4.4 4.4 13.3 13.3 3 20.0 35.6 24.4 24.4 4 33.3 20.0 33.3 33.3 5 40.0 35.6 20.0 22.2 Source: based on the data collected by my survey from 2/2018 to 2/2019.

Table 4.2: questionnaire data for facilities of public transportation facilities of public transport convenience convenience for score comfort cleanliness safety for disable information 1 2.2 0.0 0.0 11.1 2.2 2 6.7 4.4 8.9 11.1 15.6 3 17.8 20.0 17.8 35.6 22.2 4 37.8 31.1 33.3 17.8 31.1 5 35.6 44.4 40.0 24.4 28.9 Source: based on the data collected by my survey from 2/2018 to 2/2019.

Table 4.3: statistic of public transportation of Shenzhen (1979-2017) total passenger length of total passenger number of number of traffic of bus operation traffic of rail year operation operation lines (10000 rail lines transport bus lines rail lines person) (km) (10000 person) 1979 2 1980 3 1981 6 1982 7 1983 9 1,399 1984 19 2,974 1985 27 5,184 1986 29 5,827 1987 32 9,068 1988 37 16,399 1989 38 16,747 1990 42 21,947 1991 51 19,821 1992 55 27,248 1993 61 30,600 1994 68 31,020 1995 80 35,390 156

1996 89 35,495 1997 125 36,202 1998 137 37,250 1999 145 40,600 2000 131 42,800 2001 138 47,072 2002 138 51,714 2003 185 50,719 2004 208 100,820 2005 227 101,621 22 5766 2 2006 277 123,084 23 8990 2 2007 316 135,668 24 11765 2 2008 340 145,701 25 13550 2 2009 578 213,603 25 13823 2 2010 758 228,058 64 16271 4 2011 825 223,735 177 45985 5 2012 854 228,305 177 78129 5 2013 881 220,178 177 91715 5 2014 886 225,739 177 103675 5 2015 903 206,892 177 112188 5 2016 976 186,799 285 129713 8 2017 992 165425 297 165545 9 Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2018. (Beijing: China Statistics Press, 2018), 412. a. Minibus in Memory In order to alleviate the problem of inadequate bus services, Shenzhen began to introduce minibusses to supplement the bus service. In January 1990, Shenzhen promulgated the Interim Provisions on the Operation and Management of Small and Medium Buses in Shenzhen. Public minibusses were operated on the market, and the government did not grant financial subsidies. Market demand attracted a lot of capital into public transport services. The rapid development of public minibusses improved Shenzhen's public transport situation and temporarily supported the rapid development of SSEZ. The experience of riding minibusses become one of the deepest memories of people living in Shenzhen in the 1980s and 1990s.

Originally, minibusses had fixed running routes and stations, but to attract passengers, all minibusses ignored the fixed stations. In actual operation, as long as someone waving on the street, the minibus stopped immediately and let the passenger get on, and the minibus also stopped immediately as soon as a passenger said he/she wanted to get off. At that time, the call to get off a minibus was made in , so "Youlo" (有落) was the first Cantonese that everyone from hinterland learned in Shenzhen, and now it was a good memory. In addition to the convenience of “waving and stopping”, the operation routes and times of minibusses filled the gaps of the bus route. Buses

157 only operated on major urban roads, while minibusses could reach many narrow roads and remote areas. Buses started at 6:00 in the morning and ended at 10:00 in the afternoon at that time. On the contrary, minibusses operated for a longer time, some even overnight, which was particularly important for people who worked early or night shift, or sometimes got out early and returned late. However, minibus services brought convenience to Shenzhen people, it also brought many problems. Because of the low admission requirement and insufficient government supervision, many small-scale private entities operated public transport services. They stopped at any time to attract passengers; they drove at very fast speed to run more rounds; they often overloaded to sell more tickets. As a result, the phenomenon of random parking on urban roads was serious; sudden pulling over and pulling out often caused traffic accidents; poor vehicle condition and poor service were often complained of by passengers. Moreover, there were many unemployed floating populations in Shenzhen at that time, and the urban security work was weak. Minibusses became frequent places for theft and robbery. One interviewee recalled that he used to take minibusses from Luohu to Shekou, and thieves cut his trousers many times. If the thieves were found in the process of stealing, they would directly take out a knife to conduct a robbery.

In response to various problems of minibusses, Shenzhen Transportation Bureau tried a variety of techniques of control, including revoking some drivers' operating licenses of as they violated regulations many times, prohibiting overloading, prohibiting pulling over suddenly outside fixed stops, etc., but with little effect. In 2003, The Bureau started the deployment to withdraw minibusses from central urban areas gradually. In April 2005, the Bureau launched a “San Ge Yi Pi Plan”, that was, by eliminating, transferring to the third-class bus network outside the Second Line, and converting to bus routes, the minibusses were gradually cleaned up. Until June 2006, minibusses formally and completely withdrew from the lives of Shenzhen people inside the Second Line. The withdrawal of minibusses was rejected by many citizens at the beginning. Although there were various problems in the operation of minibusses, their service was important to their daily life. There was an online forum called Mayor's Hotline, which was a channel for citizens to communicate with government officials. Some people complained in the forum that their commuting time without minibusses was more than twice as long as before. Some people complained that they could not find a bus to go home at night and could only get on a taxi. Some people issued fierce criticisms that the government withdrew minibusses when there was no perfect alternative, which was a sign of disregard for people's livelihood, and a decision made at will in an air- conditioning office. Someone even demanded the resignation of the director of the Bureau. The complaints and demands of the citizens urged the Bureau to take many measures to improve the operation capacity and efficiency of public transport, such as increasing the number of buses and the density and length of the line network, prolonging the operation time, construction of bus lanes301, planning and construction

301 Shenzhen’s bus lane was built in 1997 and Shenzhen was the first city in China to set up a bus lane. Since 2010, the annual growth of bus lanes has averaged 19%, which has basically formed a scale network. By 2018, 1016 lane-kilometers of bus lanes were set up, reaching 7.8%. For more information, see http://jtys.sz.gov.cn/zwgk/jtzx/gzdt/qt/201808/t20180823_13962030.htm (access on 27/6/2019). 158 of the subway, among which the subway brought great convenience to Shenzhen people because of its outstanding characteristics of large capacity, safety, and punctual operation. b. Shenzhen Metro Shenzhen had long had the idea of building a metro. In December 1992, the feasibility study of Line one was started. It was not until 1998 that the project was approved by the former State Planning Commission of China. The construction began in April 1999 and Shenzhen became the fifth city to construct rail transit in China. The trial operation of phase one of Line one was conducted on December 28, 2004. In the year when Line one started construction, Shenzhen began to compile the Comprehensive Transport and Rail Transit Planning of Shenzhen and put forward the development goals and strategies of the long-term rail network. In October 2001, the Comprehensive Plan for the Short and Medium-Term Development of Shenzhen Urban Rail Transit was compiled, putting forward a railway network plan of eight lines with a total length of 246.4 kilometers. Then, in September 2003, the General Office of the State Council issued the Notice on Strengthening the Management of Construction of Urban Rail Transit (the State Office [2003] No. 81), which required all cities, which planned to build urban rail transit projects, to compile urban rail transit construction plans and submit them for joint examination and approval by the State Development and Reform Commission and the Ministry of Construction. The State Council would do the final examination and issue the approval.302 Upon revising and improving the Short and Medium-Term Development Plan, Shenzhen compiled the Shenzhen Urban Rail Transit Construction Plan, which was approved in March 2005. By 2018, Shenzhen had built eight subway lines (see photo 4.15) and two tram demonstration lines. In the latest publication of Shenzhen Rail Transit Line Network Planning (2016-2030) (see photo 4.16), 32 urban rail lines were planned for construction by 2030, with a total scale of about 1,142 kilometers. The plan put forward the integrated transportation development goal to realize the "45/70/70" by 2030, namely, 45 minutes' access between the main and subsidiary centers of the city; public transport accounting for more than 70% of motorized travel; rail transit accounting for more than 70% of public transport.303

Statistical data show that the total passenger traffic of rail transit has increased rapidly

302 According to document No. 81, the cities declaring the development of metro should meet the following basic conditions: the general budget revenue of local finance is over 10 billion yuan, the GDP is over 100 billion yuan, the population of urban areas is over 3 million people, and the passenger flow of planned lines is over 30,000 people in one-way peak hours. Since the issuance of document No. 81, the construction of Metro has reached a climax in major cities. As of 2017, 33 cities in China have built rail transit. As some cities blindly declare the construction of Metro in spite of local financial resources, resulting in heavy local debts, the General Office of the State Council issued and implemented the Opinions on Further Strengthening the Management of Planning and Construction of Urban Rail Transit on July 13, 2018. It is stipulated that the city declaring the construction of Metro must meet the following conditions: the general public finance budget revenue exceeds 30 billion yuan, the GDP of the region exceeds 300 billion yuan, and the permanent population of the urban area exceeds 3 million people. At the same time, document No. 81 was abolished. 303 More information see Shenzhen Rail Transit Network Planning from http://pnr.sz.gov.cn/xxgk/gggs/201711/t20171107_451023.html (access on 27/6/2019) 159

(see table 4.3). 165.45 million, the number of 2017, was 28 times as many as 57.66 million in 2005, with an average annual growth rate of 23% in 12 years. Moreover, the total passenger traffic of rail transit surpassed that of bus lines for the first time in 2017, which had already declined for three consecutive years. It indicated that with the improvement of the Shenzhen Metro line network and the linkage development with surrounding land, Shenzhen people were more inclined to use the Metro to travel. In addition to the advantages of safety and punctuality, some main stations of the Metro often developed underground commercial spaces, which usually sold daily commodities, fashion goods, snacks, specialty foods, and so on. Therefore, people could conveniently carry out daily shopping, or meet friends for meals by taking the subway. Some large metro businesses have developed into Metro malls and become travel destinations. Subway stations were usually connected with the underground space of the surrounding areas. People could directly reach the major shopping malls, cultural and entertainment facilities, such as libraries, museums, the grand theatre, the gymnasium, theme parks, and some important buildings, through the underground corridor of the subway. This kind of accessible underground space is especially suitable for the climate in Shenzhen, that is rainy and wet in spring, and sunny and hot in summer. People can reach their destination directly without going out of the ground and avoiding bad weather.

Shenzhen Metro also connects with long-distance transport networks and with major ports to achieve seamless connections. The terminals of Line one and Line four are Lo Hu Port and , respectively, which connect Hong Kong's railways directly to major urban centers of Hong Kong. Line eleven is an express metro line that can reach Shenzhen Bao’an International Airport. Line two can reach the Shekou Cruise Center, which is not only the port of cruise ships but also the wharf for ferries going to Hong Kong, Macao and several cities in the Pearl River Delta. Lines four and five connect directly to Shenzhen North Railway Station, which is the high-speed railway station admitting all the high-speed railway lines in and out of Shenzhen. Another high-speed railway hub is , which is an important station of Guangzhou-Shenzhen- Hong Kong High-speed Railway. People can go directly to West , Hong Kong, and realize one place and two inspections. Lines two, three and eleven meet here and jointly build a large underground transportation hub in the center of Shenzhen City.

Photo 4.15: Shenzhen metro line map

160

Source: http://www.szmc.net/page/html5.html (access on 29/06/2019).

Photo 4.16: overall plan of Shenzhen Rail Transit Network Planning

Source: http://pnr.sz.gov.cn/xxgk/gggs/201711/t20171107_451023.html (access on 29/06/2019).

4.3.2 Public Transport and Housing a. Public Transport and Housing Location Value The Trade-Off Theory was usually used to explain the relationship between residential location and transportation, which was established by W. Alonso and W. Evans in the

161

1960s，based on their studies on residential location from the perspective of the relation between urban land-use and transportation system. They argued that housing costs were lower, but transportation costs were higher when further away from the city center, conversely, transportation costs were lower, but housing costs higher when near the city center. When people chose a residential location, they considered both transportation and housing costs simultaneously. The best location was with the minimum sum of the two costs. Therefore, when deciding the location of a house, people would consider the necessary living area and transportation cost based on their family income. The transportation costs included direct payments and opportunity costs for relative time304. However, this theory was based on the American housing development model and some restrictive assumptions; it was not entirely applicable to housing consumption in Shenzhen. First of all, housing prices in Shenzhen did not decline as obviously as those of the United States from the city center to the suburbs. Secondly, public transportation costs in Shenzhen were not worth mentioning at all compared with housing prices. For example, Shenzhen Metro adopted the mileage sectional fare system. The metro fare included starting price and mileage price (with one yuan as a progressive unit). The starting price was 2 yuan for the first 4 km. The mileage price was divided into three sections, from 4 km to 12 km, 4 km per yuan; from 12 km to 24 km, 6 km per yuan; more than 24 km, 8 km per yuan. Taking Shenzhen metro line one as an example, from the first station, Luohu, to the last station, Airport East, the journey was 40 kilometers with 30 stations and It only cost 9 yuan. Therefore, people completely neglected transportation cost when buying a house. Only low- income people would consider the daily transportation expenditure when renting a house.

Although the direct cost of transportation was not a consideration of buyers, interviews and questionnaires showed that transportation was one of the important factors that people considered when buying or renting a house, second only to price and housing pattern. What consumers were concerned about was the transport convenience, that was, the time cost of transportation. For home buyers, the spatial distance between the residential area and the central area was not a problem, but the accessibility of their regular destinations was an important issue. Regular destinations included husband’s and wife's workplaces, children's school and family's daily shopping place. The focus of traffic demand varied with family population structure. All respondents with children agreed that children should go to school within half an hour, ideally within fifteen minutes, whether by car or on foot. Families with older people generally required shopping places within walking distance. Working people preferred a commuting time within one hour. Therefore, when people chose a house, young people usually preferred to live in the city center, close to workplace and entertainment. Families with children tended to choose residential areas close to good schools, taking into account the time of parents' commuting. As traffic congestion in Shenzhen became more and more serious, people with fixed commuting places tended to choose public transport

304 For more information, see Shiwen Sun. Modern Urban Planning Theory. (Beijing: China Architecture & Building Press, 2005), 277. 162 services. Therefore, when people chose their residence, they mainly considered their commuting time by public transport. Whether there was a suitable public transport line near the community and the distance between the house and the stations were the traffic factors that people seriously considered when they bought a house.

The distance and accessibility of stops determined the convenience for people to travel by public transport, which was not only a factor affecting the housing choice of ordinary families but also the important factor affecting housing prices. The research on the influence of the Shenzhen Metro line one on the housing price along the line showed that the affected areas of the subway in terms of the real estate value were in the area of 600 meters radius from the subway stations. The average increase of house price in the 600-meter radius area was 16.95%, and the increase of house price in the 400- meter radius area was more obvious, with an average increase of 23.03%. The biggest impact of increased value was the houses which were 100m-200m away from subway stations, that the house prices were 30.62% higher than those of the houses which were 700m-800m away from stations305. This research was conducted one year after the first phase of the operation of Line one, which was the only subway line in Shenzhen at that time. Meanwhile, other public transport facilities and the use of private cars in Shenzhen were not developed perfectly. Therefore, the impact of Line one on residents' lives and housing prices along the line was huge. But once the metro line developed into a network covering the whole city, and the whole public transport service system has developed to a certain extent, the impact of public transport on housing prices was not so obvious and important. Especially nowadays, the 500-meter coverage rate of Shenzhen's public transport reached 91%, which meant that residents in most areas could find ways of public transport within walking 500 meters. A single mode of public transport could no longer be used as a selling point in the real estate market. Only houses with multiple traffic advantages could make use of traffic advantages as a selling point and raise the price accordingly. b. Public Transport and Housing Development Traffic and residential spatial distribution are interrelated and mutually restrictive. Residential spatial distribution would affect the direction and flow of traffic routes, while traffic route layout changes the residential spatial structure and people's choice of housing. In the early stage when the development of urban road and traffic facilities were not yet developed perfectly, traffic conditions were the focus of developers when they bid on the land, and also the key factor for consumers to consider when buying houses. Shenzhen compiled urban planning in every developmental stage, according to which roads and other public facilities were built. However, the demand for capital expansion promoted the advanced development of Shenzhen’s industries. The influx of population made the development of residential buildings flourish everywhere, exceeding the step-by-step development of roads, transportation, municipal infrastructure, and public services. At that time, developers often got some parcels of

305 Jiefen Zheng, Hongyu Liu. The Impact of URRT on House Prices in Shenzhen. Journal of the Society Vol.27 No.5 (2005), 11-18. 163 land, surrounding which there were not any roads and pipelines of water and electricity. Thus, developers had to assume some functions of governments to develop the city, that was, to build roads around the parcel and lay underground water, electricity and gas pipelines according to the requirements of urban planning. The government would deduct part of the cost from the land fee. It was a common method in Shenzhen in the early period that the government used the funds of developers to carry out urban construction.

Apart from building roads and supporting facilities, developers often needed to solve dwellers’ travel problems. Otherwise nobody would buy the houses. Therefore, many developers offered special bus services to provide paid transportation services for dwellers of the community. Vanke’s Zhongnan Bus Incident (mentioned in chapter three) happened in the period when the Shenzhen government withdrew the public minibusses, and prohibited the special community buses run by developers as well. Not only developers but also many large enterprises run special buses for their staff to solve daily commuting problems for their employees, such as Huawei and Sanyo factory. Compared with the dirty and messy public minibusses, the clean and orderly private buses of communities and enterprises were also a major feature on the streets of Shenzhen in the 1980s and 1990s.

When the east-west urban arteries, , Binhe Road, Binhai Avenue and Beihuan road, were built one after another, Shenzhen was able to expand rapidly to Futian District and Nanshan District. Super-large and well-equipped communities such as the Great Azure Coast, Dingtai Fenghua, and Zhonghai Sunshine Palm Garden emerged, and people's housing choices rapidly shifted towards Nanshan District. However, there was a long-term dualistic development inside and outside the Second Line. One important reason was the traffic problem. From outside to inside, all vehicles and people needed to go through checkpoints. Although there was no need to check identity certificates later, the limited number of corridors became the traffic bottlenecks, which were extremely congested areas for commuting every day. One interviewee said that in 1995 he paid 800 yuan per month to rent a single room (public toilet) in a tin house on Hubei Road, Luohu District, which was illegally built on the top floor of a six- story farmer's house. The housing conditions were very poor. It was too hot in summer to stay before 22:00, while it was cold in winter. In summer, when typhoons occurred, he had to go downstairs to avoid the potential risk of collapse. The only advantage of this room was that he could walk to the office. Bearing for such conditions for about one year, he moved to Buji (布吉), a town located outside the Second Line. He shared a three-bedroom suite-house with two friends, which was one of the best residential buildings in Buji at that time. He also paid 800 yuan per month for his room. His housing conditions were greatly improved, but it was extremely painful to go through Buji checkpoint every day. There was no way out for him as his income only allowed him to choose between housing conditions and convenient transportation. When good traffic conditions were scarce resources, the impact of traffic on house prices and rents was obvious. Nowadays, the previous checkpoints are still extremely busy traffic areas

164 every day. But with seven metro lines headed to the outside area of the Second Line, the real estate industry was flourishing, and the gap of housing prices between the inside and outside of the Second Line was getting smaller and smaller.

With successful industrial transformation and development, Shenzhen continued to attract a large number of people to gather to the city. Shenzhen's urban development space was insufficient, which was the bottleneck of Shenzhen's further development. The rising housing prices made Shenzhen more and more unaffordable. Relieving industry and population to its surrounding cities was the way out for Shenzhen to continue its development. In recent years, Shenzhen has continuously strengthened its development cooperation with Dongguan and Huizhou in various aspects. In 2014, Transportation Bureau of Shenzhen, Dongguan and Huizhou jointly organized and compiled the Integrative Transportation Planning in Shenzhen Dongguan and Huizhou, which covered seven special topics, i.e. regional road network convergence, inter-city rail transit, port and shipping integration, air traffic integration, planning of regional integrated passenger transport hub, planning of regional logistics park layout, and inter-city public transport integration306. At that time, the GBA was not proposed. The Transportation Planning mainly aimed to help Guangdong to build the Pearl River Delta into the most competitive metropolitan area in the world and form a pattern of coordinated regional development. This plan was also a programmatic document guiding the integration of transportation in the three cities, and an important basis for compiling related transportation plans. The Shenzhen Rail Transit Line Network Planning (2016-2030) proposed the idea of connecting seven of these lines with urban rails of Dongguan and Huizhou. In the project design, these lines would be reserved possibilities at the Shenzhen border for extending to the surrounding cities or transferring to the surrounding urban rails. A consensus has been reached between Shenzhen and Dongguan on the connection between the feeder line of Shenzhen Line six and Dongguan Line one and entered the specific implementation stage. Rail transit made it possible to construct one-hour life circle in three cities of Dongguan, Shenzhen, and Huizhou.

The 13th Five-Year Plan of Shenzhen's Housing Security Development put forward that during the 13th Five-Year Plan, Shenzhen would build 400,000 new affordable housing and talent housing, of which no less than 300,000 would be talent housing. However, there was a serious shortage of land for urban construction in Shenzhen. In order to achieve this goal, it would be important to adopt inter-city cooperation of Shenzhen, Dongguan, and Huizhou in the development and construction of talent housing. It can be predicted that the land development around the rail stations of Dongguan and Huizhou, which are connected with the Shenzhen track, will benefit. Land prices and house prices will have the opportunity to rise. This is not only a development opportunity of real estate companies but also provides more housing options for Shenzhen residents.

306 For more information, see Integrative Transportation Planning in Shenzhen Dongguan and Huizhou http://jtys.sz.gov.cn/zwgk/xxgkml/ghjh/zxgh/201507/t20150721_5670372.htm (access on 27/6/2019) 165

The establishment of the Guangdong-Hong Kong-Macao GBA consolidated Shenzhen’s opportunity to expand the developmental space. On 31st October 2017, a press conference on a new round of urban master planning was held in Shenzhen. The idea of building a ‘50km metropolitan circle’ was put forward, that was, Shenzhen would build a metropolitan transportation network within an area of 50km radius to link closely to Guangzhou, Hong Kong, Huizhou, Zhongshan, Zhuhai, Dongguan, forming a metropolitan circle around Shenzhen307, which would break through the bottleneck of insufficient space and provide new sources for capital expansion to usher in a new round of development.

4.3.3 Conclusion Travelling is one of the routine activities in people’s daily life. The satisfaction and comfort of travel are largely dependent on transportation conditions. With the increasing traffic congestion and the development and improvement of public transport, more and more Shenzhen people choose to use public transport. Transportation, especially the accessibility to the public transport, is another important factor affecting buyers' housing choice.

In the past 40 years, public transport in Shenzhen has developed from a blank field to achieving the highest score in China. Moreover, with the coordinated development with surrounding cities, public transport is extending outward, forming a regional network, providing opportunities for Shenzhen’s spatial expansion. This provides development opportunities of real estate companies in both Shenzhen and sounding cities, and provides more housing options for Shenzhen residents as well.

307 See the press conference on the compilation of ‘Shenzhen Master Planning (2016-2030)’, http://www.sz.gov.cn/cn/xxgk/xwfyr/wqhg/20171031/ (access on 12/9/2018) 166

Chapter 5: Housing Choice: Children’s Education and Age Care

5.1 introduction

With urban development, more and more people settled down in Shenzhen, bringing families reuniting from their hometowns or setting up new families in Shenzhen. The sight of hurrying working people was gradually changed by the leisurely elders and children in parks and community spaces. Shenzhen was gradually transforming into a settled city with a normal population structure of all ages. The increase in the population of the elderly and children not only had a significant impact on family life but also affected the requirements of urban housing and public facilities profoundly. Innovative industries and rapid development were the advantages of attracting talent in Shenzhen. However, the keys to retaining talent in a city, which were affordable housing, education, medical treatment, and pension facilities, were the weakness of Shenzhen. This chapter focuses on children’s education and old-age care to explore their relationship with housing development, respectively.

The relationship between education and housing has been mentioned for several times in the above chapters. Children’s education was the greatest anxiety of Chinese parents nowadays, especially in the one-child family. The hopes of two generations, parents and grandparents, were pinned on a child, hoping he/she would be outstanding and bring honor to the family in the future and have a better life as well. The whole family’s resources were devoted to children’s education, including early education, talent and skill training, improving academic performance, and so on. To get into a famous university, children would be better studying in good primary and secondary schools, which pushed parents into paying a huge price to buy housing around high- quality education resources to get admission tickets for children. Developers seized on this mentality and tried different ways to tie their development projects to education so that their residential products could be sold out faster and at much higher prices. When various grievances in high prices of school-housing ( 学 位 房 ) and inequality of educational resources became more and more serious, the government had to take some measures to curb the spread of such resentment. In the first part of this chapter, the information obtained through interviews and questionnaires is taken as the entry point, taking the Shenzhen Experimental School (SES) as the main case, to discuss the process and methods of bundling housing development and .

The second part is about pension issues. The aging problem is quite challenging in many countries. China stepped into the aging society in 2000, and currently in the stage of accelerating development. Shenzhen is relatively a young city and has not yet entered an aging society; pensions do not seem to be of the greatest concern to people. However, In the interview, some interviewees have expressed their concern about the pension issue. People born in the 1960s and the early 1970s are close to retirement age. They expressed their wishes of moving to a different house which had more

167 suitable spaces and convenient facilities for the elderly, after their children go to universities. Young people began to think about their parents' pension, hoping that there are appropriate social institutions or community services to share their pressure. Therefore, the early attention to and discussion of pension issues will be beneficial to Shenzhen’s future housing development and urban development.

5.2 Anxiety of Children’s Education

5.2.1 Compulsory and the Development of Shenzhen Schools

At the fourth session of the Sixth NPC on April 12, 1986, China adopted the Law on Compulsory Education308 , beginning to implement nine-year compulsory education, which was for children and adolescents of the right age from six years in primary school to three years in junior middle school, with the basic characteristics of being compulsory, free and universal. Compulsory education implemented the principle of proximity enrollment. Each public school was allocated a catchment in its adjacent residential area.

The table 5.1-5.3 show respectively the number of secondary schools, primary schools, and kindergartens, full-time teachers and enrolled students in Shenzhen from 1979 to 2017. Although the number of students increased rapidly (the number of middle school students in 2017 was 30 times that of 1979, primary school students 20 times and kindergarten students 110 times, respectively), the number of schools and teachers were also growing at the same time. And the average growth rate of teachers was even greater than that of students. The growth rate of schools was not so fast in terms of quantity, but it can be inferred from the average number of students in schools that schools increased their capacity by expanding their size. For example, the average number of pupils in a primary school in 2017 was 2,820, 13 times that of 208 in 1979. Calculated by 45 pupils per class309, there were ten classes per grade on average in primary schools in 2017, while in 1979 there were no more than five classes in a whole school, which was too small in scales. When compared with the average annual growth rate of Shenzhen’s permanent population, 10.2%, which was based on the population of 12.53 million in 2017 and 31.41 million in 1979, the average annual growth rates of students in primary and secondary schools were lower. This showed that Shenzhen was more attractive to young people, who did not establish a family yet. At the same time, it could be speculated that quite a few people who had families worked in Shenzhen but left their children to be raised in their hometowns, especially the families without Shenzhen household registration. On the other hand, the rapid growth of young

308 The current Compulsory Education Law of the People's Republic of China was revised and adopted on June 29, 2006 on the basis of the Education Law of 1986, and has been implemented since September 1, 2006. Nowadays,12 years of compulsory education is under discussion and pilot stage. 309 The number of 45 students per class in primary schools is regulated by educational codes. In fact, some good schools have 50-70 students in each class. Some schools have insufficient students, with less than 45 students in each class, while international schools or some private schools basically control 30- 35 students. 168 children in kindergartens, especially in the past decade, showed that more and more young families had settled in Shenzhen. Coupled with the second-child policy and the relaxation of the enrollment conditions for children without Shenzhen household registration, it was foreseen that the capacity of kindergartens, primary schools and middle schools in Shenzhen would become serious issues in the coming years. The problem of insufficient public service facilities that did not develop synchronously in Shenzhen’s rapid urban development has gradually emerged in recent years.

Table 5.1: number of secondary schools, teachers, and students in Shenzhen (1979- 2017) number of full-time teachers students in year secondary in secondary secondary schools C/A C/B schools (A) schools (B) (C) 1979 24 752 13686 570 18 1980 24 625 12296 512 20 1981 26 676 13088 503 19 1982 28 860 17080 610 20 1983 30 1044 20982 699 20 1984 35 1372 27636 790 20 1985 38 1902 35334 930 19 1986 40 2138 40208 1005 19 1987 43 2376 44910 1044 19 1988 47 2603 43267 921 17 1989 47 2771 45056 959 16 1990 49 2915 46473 948 16 1991 51 3255 50625 993 16 1992 53 3533 55857 1054 16 1993 51 3892 60337 1183 16 1994 56 4290 66073 1180 15 1995 62 4675 71540 1154 15 1996 71 5004 76949 1084 15 1997 73 5276 82155 1125 16 1998 78 5502 86009 1103 16 1999 83 5935 91260 1100 15 2000 94 6596 106996 1138 16 2001 107 7224 126190 1179 17 2002 132 8643 150654 1141 17 169

2003 179 9989 179628 1004 18 2004 216 11625 211224 978 18 2005 245 14196 240508 982 17 2006 260 15678 256630 987 16 2007 273 17846 279180 1023 16 2008 277 20091 298939 1079 15 2009 285 21335 316024 1109 15 2010 295 22417 334752 1135 15 2011 299 23897 346942 1160 15 2012 302 25807 359643 1191 14 2013 314 27048 371735 1184 14 2014 325 28320 378690 1165 13 2015 335 29252 385221 1150 13 2016 352 30674 396455 1126 13 2017 368 32590 417641 1135 13 annual average growth rate 3.77% 11.14% 7.77% from 1979 (%) Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2018. (Beijing: China Statistics Press, 2018), 381-384.

Table 5.2: number of primary schools, teachers, and students in Shenzhen (1979-2017) full-time number of students in teachers in year primary schools primary schools C/A C/B primary schools (A) (C) (B) 1979 226 1588 47022 208 30 1980 238 1763 49168 207 28 1981 244 1948 51560 211 26 1982 246 1954 54538 222 28 1983 248 2025 56319 227 28 1984 260 2282 62021 239 27 1985 258 2749 70277 272 26 1986 257 2977 77884 303 26

170

1987 255 3265 84601 332 26 1988 257 3571 96474 375 27 1989 264 3810 104041 394 27 1990 263 4221 111711 425 26 1991 260 4514 118460 456 26 1992 261 4832 127978 490 26 1993 267 5342 139272 522 26 1994 269 6015 147186 547 24 1995 274 6429 157210 574 24 1996 274 7046 170983 624 24 1997 275 7567 190192 692 25 1998 286 7940 215652 754 27 1999 325 8914 256060 788 29 2000 353 11550 313852 889 27 2001 377 13254 363637 965 27 2002 395 15763 415097 1051 26 2003 376 17920 469684 1249 26 2004 378 19660 526419 1393 27 2005 358 23866 566278 1582 24 2006 357 25203 564891 1582 22 2007 347 27209 575160 1658 21 2008 342 28540 585852 1713 21 2009 346 28906 589481 1704 20 2010 340 29769 618459 1819 21 2011 334 31186 651307 1950 21 2012 333 33496 683058 2051 20 2013 335 35546 730232 2180 21 2014 331 39115 793178 2396 20 2015 334 42630 864841 2589 20 2016 337 46975 910974 2703 19 2017 342 50805 964510 2820 19

171 annual average growth tate 0.13% 8.15% 5.13% from 1979 (%) Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2018. (Beijing: China Statistics Press, 2018), 381-384.

Table 5.3: number of kindergartens, teachers, and students in Shenzhen (1979-2017) number of full-time teachers students in year kindergartens in kindergartens kindergartens C/A C/B (A) (B) (C) 1979 90 4587 51 1980 52 159 3377 65 21 1981 32 141 5074 159 36 1982 50 259 7723 154 30 1983 69 365 9252 134 25 1984 87 575 21140 243 37 1985 79 483 14338 181 30 1986 273 573 22703 83 40 1987 187 1005 26072 139 26 1988 195 937 27106 139 29 1989 207 1193 34781 168 29 1990 228 1317 36041 158 27 1991 257 1451 43877 171 30 1992 282 1698 49985 177 29 1993 281 2288 56024 199 24 1994 333 2745 63316 190 23 1995 349 3202 62571 179 20 1996 380 3665 68769 181 19 1997 446 4613 71378 160 15 1998 488 5257 77623 159 15 1999 560 6092 88322 158 14 2000 562 7234 93164 166 13 2001 588 7690 103083 175 13

172

2002 634 8893 110390 174 12 2003 656 9539 123856 189 13 2004 699 10670 133019 190 12 2005 744 11973 147672 198 12 2006 758 12815 152330 201 12 2007 819 14381 169496 207 12 2008 865 15761 191222 221 12 2009 974 18133 211182 217 12 2010 1040 20786 260873 251 13 2011 1093 21627 285146 261 13 2012 1186 24154 316929 267 13 2013 1313 26803 368937 281 14 2014 1402 28782 399014 285 14 2015 1489 31704 438498 294 14 2016 1579 33746 463319 293 14 2017 1683 36904 504955 300 14 annual average growth tate 4.66% 62.46% 28.70% from 1979 (%) Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2018. (Beijing: China Statistics Press, 2018), 381-384.

5.2.2 The Anxiety of Middle-class Families

As far as the current school capacity is concerned, the places in Shenzhen’s nine-year compulsory education system are sufficient for children and adolescents who meet the requirements of enrollment. That is, as long as the required documents are available, both children with/without Shenzhen household registration can enter the compulsory education system. Since all the children can apply for a place in a school, what are the worries of the parents, and what kind of parents are worrying? According to the statement of the interviewees, in the 1980s and 1990s, education did not become the anxiety of ordinary families in Shenzhen. Most families (including those without Shenzhen household registration) followed the principle of proximity enrollment and obtained places in schools near their houses. Parents were generally concerned about whether the distance from school to home was reasonable for children to walk or ride bicycles. However, with the increasing competition in society, parents were gradually

173 anxious about their children’s education. According to the interview statistics, except for the four unmarried interviewees, 20 of the 25 married interviewees said they had bought/rent or would buy/rent a school-housing, accounting for 80%. Similarly, the survey showed that 78% of married respondents had bought or planned to buy a school-housing. Meanwhile, most respondents thought that the monthly cost of children’ education was very high, ranging from 10 to 50% of household expenditure. Most of these anxious people were born in the 1970s and 1980s, whose children were mostly born after 2000, being in different school-ages from kindergarten to middle school. Even a mother with her baby just a few months old was already anxious about which school her baby should go to and when she should buy a school-housing. This anxiety about children’s education was common among middle-class families. What they worried about was not whether the child had a place in school, but whether and how to obtain high-quality educational resources.

The research on China’s middle-class has been a hot topic in recent years. Although there are different definitions of the middle-class, the evaluation criteria are usually income, wealth, occupation, lifestyle, and so on. McKinsey divided China's middle- class into two categories in 2014. The popular middle-class referred to the family's annual income of RMB 66,000 to RMB 106,000, which accounted for 54% of urban households in 2012. The upper-middle-class referred to the family's annual income of RMB 106,000 to RMB 229,000, which accounted for 14% of urban households in 2012 and was predicted to reach 54% in 2020310. Hurun Report (胡润百富)311 suggested that apart from the basic requirement of “well-educated, non-manual workers, with income above the middle level”, the middle-class was a social group with higher consumption and investment abilities after excluding basic living expenditure, such as clothing, food, housing, and transportation. Hurun Report also set up a standard for middle-class families that the proportion of average annual expenditure of basic household consumption in the allotment income was less than 50%. Then, a new middle-class standard of China was put forward312.

According to the Hurun Report’s survey, behind their bright appearances, most of the new middle-class people felt anxious. Among all kinds of anxieties, the first focus was on children’s education, accounting for 45%. The well-educated people in the new middle-class attached great importance to children’s education. They deeply believed that, to a certain extent, educational background determined the future social status

310 McKinsey & Company. The Chinese Middle Class in the Next Decade: Their Features and Constraints. China Development Research Foundation Research Reference, No.4, 8/5/2014. 311 Hurun Report Inc. was established as a research unit in 1999 by British accountant Rupert Hoogewerf. It has grown into a leading luxury publishing group based in Shanghai, China. Hurun Report Inc has four divisions: Media; Conferences & PR; Market Research; and Investments. Within the Media Division, the titles are Hurun Report, Hurun Schools Guide, Hurun Horse & Sports, Wings & Water. More details see http://www.hurun.net/CN/Home/Index (access on 26/9/2019). 312 Criteria of China's new middle-class: 1. 300,000 of household income in first-tier city, more than 200,000 of household income in other cities; 2. more than 3 million of household net assets; 3. at least one property in permanent residence; 4. private cars, 5. university education; 6. white-collar workers or gold-collar workers or professional freelancers; 7. subjective self-identity as middle-class; 8. main force of the middle class is those born in 80s, then, followed by the 70s and 90s. More information see Hurun Report: China New Middle Class Report 2018. 11. 174 and identity of their children. They desired and pursued high-quality educational resources. The average expenditure of new middle-class families on children’s education in 2018 was RMB 90,000.313 The new middle-class worries largely about identity. They are in the middle of the high-income and low-income groups, with the worry of ‘going forward or going backward.’ They want to stabilize the current status of middle-class while looking for the opportunity to step on a higher level. Meanwhile, they hope to pass the legacy to the next generation. As today’s society and technology are developing so fast making the future full of uncertainty, education is the most reliable and important way for them to invest in their children’s future.

5.2.3 How Difficult to Enroll in a Famous School in Shenzhen?

For enrolling in a primary or middle school in Shenzhen, the following documents are required, household registration certificate (child’s birth certificate, household registration book) and residence certificate (property certificate or rental contract). If the child is without Shenzhen household registration, the parents are required to provide their Shenzhen resident registration with a record of continuous residence for more than one year, and social insurance certificate with a record of participation in pension insurance and medical insurance for more than one year314. If the number of students in the catchment exceeds the planned enrollment number, the priority of enrollment is determined by the scoring method, which is calculated based on household registration, years of purchase property or rent, and years of parents’ participation in social security. Each district has different scoring standards. Generally, the basic point of those with Shenzhen household registration and owning property in the catchment is higher than those without Shenzhen household registration and renting houses. A longer period of purchase or rental houses and a longer period of parents’ participation in social security get higher points. Taking Futian District’s enrollment in 2018 as an example (see table 5.4), those with Futian household registration and owning property in the catchment scored 20 basic points higher than those without Shenzhen household registration and renting houses. Therefore, children who were not in category A have no chance to enroll in a famous school at all. Even if they were in category A, places in a famous school were still not secured. It was necessary for their parents to buy a school-housing as early as possible to get higher bonus points (living for more than eight years and four months can get the highest ten bonus points). In addition, for the most popular school zones, such as Baihua Zone in Futian District315 (see photo 5.1), there applied a lock-in regulation,

313 See Hurun Report: China New Middle Class Report 2018. 19. 314 Because Shenzhen had a high proportion of population without Shenzhen household registration, solving the problem of compulsory education for non-household-registered children had always been a major problem of municipal and district education bureaus. Because of the insufficient school places many children who could not provide complete documents were excluded from Shenzhen schools through the implementation of “Shenzhen Temporary Population Children's Compulsory Education Management Measures” (Shenzhen [2005] 125). And now the adopted "Shenzhen non-household-registered Children to Receive Compulsory Education Management Measures" (Shenzhen [2018] 3) was much simpler than before, so that non-household-registered children can enroll in schools and grow up around their parents. 315 Baihua zone means the residential areas within the catchment of several famous primary schools (Liyuan, Yuanling, Experimental primary school) and junior middle schools (Experimental Middle school 175 which meant that a house could not be used for enrollment within six years after a child enrolling in a primary school, or within three years after using to enroll in a junior middle school. This measure was to curb the rapid turnover of school-housing, which made the number of enrollees stay high every year316.

Table 5.4: enrollment scoring method of Futian District, Shenzhen (2018) basic category criteria bonus points points parents own a house (more than 51% of the property right) in the school 1. bonus for continuous residence A 80 catchment, with the child registered in (cumulative no more than 10 points) that house. parents own a house (more than 51% a. owning the property: from the of the property right) in the school date of issue of real estate B 75 catchment, but the child not registered certificate, every full month earn 0.1 in that house. points owning one of the following special properties in the catchment, with the child registered in that house. 1. The parents own special housing, such as self-built housing, fund-raising b. owning a special property: housing, ancestral housing, military provision of proof of actual C housing or business apartment, with 70 continuous residence (utility bill), legal certification materials. 2. the every full month earn 0.1 points parents own a house (less than 51% of the property right). 3. the grandparents own a house, with the three generations registered in that house. owning one of the following special properties in the catchment, but the child not registered in that house. 1. c. provision of no-house certification parents own special housing, such as earns 2 points. From the lease filing self-built housing, fund-raising D 65 date, every full month earn 0.1 housing, ancestral housing, military points, cumulative no more than 10 housing, or business apartment, with points legal certification materials. 2. the parents own a house (less than 51% of the property right).

and Experimental junior high school). 316 Before the lock-in rule was enacted, a family purchased a school-housing for their child to enroll in a famous school. After all the documents handed in and checked, and the child got the enrollment, they sold the house. As a result, the school-housing turned around once a year, pushing up the house price and increasing the application numbers every year. 176

2. bonus for family planning: one- the child is registered in Futian child earn 6 points; birth based on District. The parent rent a house or E 65 policy earn 5 points; birth not based provide valid resident certification in on policy, but paid the social the catchment. compensation fee, earn 3 points. notes: in the case of the same points, Shenzhen registered the child is not registered in Futian students will be enrolled District. The parent rent a house or preferentially. The remaining places F 60 provide valid resident certification in will be enrolled according to the the catchment. cumulative time of social security of father or mother of the non- Shenzhen registered students. Source: official website of Futian Education Bureau https://www.szftedu.cn/xxgk/tzgg/201804/t20180413_97866.html (access on 25/5/2019)

Photo 5.1: Baihua Zone and Yuanling Zone in Futian District

Source: map based on screen-shot of google map (access on 18/6/2019); catchment of Futian District see the official website of Futian Education Bureau https://www.szftedu.cn/xxgk/tzgg/201804/t20180413_97866.html (access on 28/5/2019)

Choosing housing for children’s education is not only to obtain high-quality educational resources, but also to a deeper social context, a process of social stratification of today’s families and the future stratification for children. Among the interviewees, those who chose to buy or rent housing in Baihua Zone believed that not only were their children enrolled in a famous school, they were able to study in an environment with good student sources. These families got to know each other and gathered because of similar social levels and similar educational goals. Children’s education was a starting point for them to develop extensive communication and information exchange, which formed and solidified the social circle in that area. The famous schools that were generally recognized by Shenzhen people were tested by the performances in high

177 school entrance examinations and university entrance examinations for many years. Taking the key undergraduate admission rate in 2018 as an example, the rate of the whole Shenzhen city was 33.16%, while the rates of the top four senior high schools of Shenzhen were almost all above 90% (see table 5.5). So, being able to study in these senior high schools meant almost reaching the threshold of key universities. However, senior high school was not in a compulsory system, which meant the enrollment was based on the annual entrance examination. Therefore, studying in a good primary school and junior high school was the guarantee of entering a good senior high school. Buying a school-housing for high-quality primary and junior high school 317 was considered by middle-class families when their children were in kindergarten or even infants shortly after birth. After the high school entrance examination in every year, all kinds of overwhelming property promotion on the internet were for school-housing according to the new ranking of the examination. Those, who no longer needed the school-housing, wanted to sell out, while those, who wanted to get a place in good schools, needed to buy in, which was the annual carnival of real estate agents.

Table 5.5: key undergraduate admission rate of Shenzhen 2018 2018 2017 2016 key key key undergraduate undergraduate undergraduate undergraduate admission rate admission rate admission rate admission rate

All Shenzhen high 74.32% 33.16% 29.57% 29.01% schools

Shenzhen Middle 100.00% 95.30% 95.16% 94.09% School

SES (High School) 100.00% 95.20% 97.00% 95.24%

Shenzhen Foreign 99.61% 90.93% 96.00% 95.07% Languages School

Shenzhen Senior 100.00% 89.10% 92.00% 90.47% High School

Sources: https://www.sohu.com/a/276065524_515502 (access on 27/5/2019) and https://www.sohu.com/a/233066081_515502 (access on 27/5/2019)

5.2.4 Education Opportunity and Real Estate Industry

317 This refers to public schools, excluding private schools, because private schools do not enroll students according to the school catchment, but in the whole city. For example, Baihe Foreign Language School, which is often ranked first in the middle school entrance examination, attracts more than 10,000 students to apply for every year, but only 600 students are enrolled. 178 a. The Effect of Famous Schools on Housing Price People’s pursuit of high-quality educational resources has led to the housing prices rising successively around famous schools. Baihua zone where SES is located and Yuanling zone (园岭, see photo 5.1) where Hongling Middle School (红岭中学) is located are taken as examples. In the first half of 2019, the average house price of Baihua zone reached over 100,000 yuan per square meter, 45.4% higher than that of Futian District and 43.1% higher than that of adjacent Yuanling zone, while the price of Yuanling zone was only 1.6% higher than that of Futian District (see table 5.6 and figure 5.1). Baihua and Yuanling are located in almost the same geographical location, with the same external transportation, commercial, and cultural facilities. The great difference in house prices can be estimated as having two reasons. Firstly, Hongli Middle school in Yuanling zone is a famous school (within the top eight), but in the minds of parents, there are still great differences between the top four schools (SES is within the top four, see table 5.5) and the top eight. In the high school entrance examination of 2018, Hongli Middle School was ranked 24th, achieving 41.7% above 400 points, while SES was ranked 3rd, with 62.55% above 400 points318. Parents spent a lot of money to buy a school-housing to seek the opportunity for their children entering the top senior high schools eventually. So the ranking of schools obviously affected the housing prices of the zone. The second reason is about the residential building itself. Yuanling was one of the earliest family dormitory communities for government employees, which were quickly-built and low-quality multi-story buildings without elevators. Comparatively, Baihua’s buildings were built as commercial housing with the quality much better than Yuanling’s buildings. The prices are, undoubtedly, higher. The prices of school-housing were not only higher than the surrounding areas, but also rose more rapidly when prices rose and were more resilient when prices fell. One interviewee bought a multi-story apartment in Baihua zone for 1.4 million yuan in 2007, which the former owner bought for only 700,000 yuan in 2006. After her purchase, the price of the apartment continued to rise, rapidly reaching 1.8 million yuan in several months. By 2008, when the housing prices fell sharply nation-wide, her apartment once fell to 1.2 million yuan, but soon stopped falling and rose again slowly, which convinced her that school-housing was very resilient.

These famous schools, which have been running for decades, have accumulated their influence on the prices of school-housing for many years, which generally followed the changing trend of the prices of the whole city. However, if a famous school set up a new campus in a district, the change in housing prices would deviate from the normal growth rule of the market. Still taking SES as an example, in order to bring high-quality educational resources into the Bantian area, Shenzhen Experimental Educational Group was appointed by SMPG to take over Xincheng School in Longgang District and set up the Bantian Teaching Department in 2017319. The Group dispatched the principal

318 Only students with 400 or more points in the middle school entrance exam can enroll into a good senior high school. More information see http://news.szhome.com/283942.html (access on 29/5/2019). 319 Bantian area of Longgang District is the area where high-tech companies gather in Shenzhen. Huawei is the largest and contributes a huge amount of tax revenue to Shenzhen. Huawei employees' dormitories are in Bantian, and many employees have bought houses near the company. But because there are no 179 and main cadres and teachers from the Experimental Junior High School to integrate this huge campus, which covered nine-year compulsory education from primary school to junior high school, with the Group’s teaching idea and management method. As early as in the demonstration stage of this takeover, there were many rumors and much speculation, all of which were predicting the re-division of the catchment after the takeover. Meanwhile, the housing prices around Xincheng School begun to rise slowly. In September 2017, when the Baitian Teaching Department was officially listed, the enrollment of 2017 was over, so that the new school just followed the previous enrollment of Xincheng School. The first enrollment of Bantian Teaching Department would begin in April 2018, that meant, the catchment of the new school in 2018 would not be officially announced until March 2018. However, when I visited the surrounding communities (see photo 5.2) of the Bantian Department on January 2, 2018, a real estate agent said that the housing prices of several communities which were predicted in the catchment had risen by nearly 50% in less than one year from the beginning of the rumor, from 40,000+ yuan to 60,000+ yuan per square meter. According to my observation, the area was not yet maturely developed, where some roads were still under construction without public transportation access. As for commercial facilities, there was only a community-level supermarket in Vanke Great Mansion (万科金色半 山) and small shops in urban villages. Moreover, these communities were surrounded by a large number of urban villages with an unpleasant environment. Based on normal market rules, it would take years for housing prices of the area to rise to 60,000+ yuan per square meter. This case showed that high-quality educational resources had a huge stimulating effect on the real estate industry. It is not hard to understand why developers try various ways to tie their residential product to education.

Table 5.6: the average housing price of Futian District, Baihua zone and Yuanling Zone average price of average price of average price of Futian District Yuanling Area Baihua Area (yuan) (yuan) (yuan) 2019 70069 101865 71185 2018 67774 101601 72784 2017 62171 86269 70517 2016 60232 84377 68689 2015 45997 67044 52063 2014 34158 42683 35116 2013 28888 40541 31350 2012 24026 33009 25982

high-quality schools in Longgang District recognized by Huawei employees, their children choose to go to school inside the Second Line (Futian, Nanshan, etc.), but the daily traffic causes a lot of trouble. Therefore, Huawei directly requests the municipal government to inject high-quality education resources into the Bantian area. Because of the importance of Huawei, and rumors that Huawei is moving away from Shenzhen for a long time, the municipal government finally instructed the Experimental School to take over the Xincheng School. The above information is provided by the respondent. 180

2011 23927 _ 26344 2010 19907 _ 21780 average 2.80% 2.98% 2.52% growth rate Source: https://www.anjuke.com/fangjia/shenzhen2010/futian/ (access on 29/5/2019)

Figure 5.1: comparison of the average housing price of Futian District, Baihua zone and Yuanling Zone.

Average Prices (yuan) 120000

100000

80000

60000

40000

20000

0 2019 2018 2017 2016 2015 2104 2013 2012 2011 2010

average price of Futian District average price of Baihua Area average price of Yuanling Area

Source: based on table 5.6, https://www.anjuke.com/fangjia/shenzhen2010/futian/ (access on 29/5/2019)

Photo 5.2: communities around Bantian Department of Shenzhen Experimental Group

Source: map based on screen-shot of google map (access on 18/6/2019); photo taken in the field research on 2/1/2018.

181 b. Making a Famous School a). How Shenzhen Experimental School Became a Famous School? As of 2017, there were 342 primary schools and 368 secondary schools (including junior and senior high schools) in Shenzhen. Why did only a small number of schools stand out as good schools320 recognized publicly and make Shenzhen people willing to pay a lot of money for an enrollment? Was it because of the government’s positioning and resources investment or the school’s operation and management? One interviewee, who is in a management position in SES, suggested that an excellent school lay in positioning first, then school operation concept. SES was the first public school founded by SSEZ government on May 3, 1985.321 According to her statement, the SES was set up to support the newly-built high-rise residential community in Baishaling (白沙岭) zone. The west area of Baishaling community began to develop in 1984 and obtained development funds through pre-sales. Because of the imperfect commercial housing market at that time, most of the domestic commercial housing was purchased by units (dan wei) and distributed to units’ staff. Most commercial houses in Baishaling were purchased by large-scale state-owned units, such as the Nuclear Power Group. From the community planning to architectural design, the buildings of Baishaling community were high-grade residences at that time. Most of these apartments were allocated to high-level employees, many of which were senior intellectuals and managers recruited from other cities to support Shenzhen’s early development. Therefore, the government decided to establish a high-positioning school to meet the educational needs of their children. At the same time, such a high- positioning school was also in line with the municipal government’s plan to build a school that conformed to the reforming and innovative spirit of SEZ.

SES was to set up a one-stop teaching model to explore the growth and education of children aged from three to eighteen, that was, from kindergarten to high school. Its positioning decided that SES would be a famous school at the beginning, which then, determined the allocation of its good resources. Most of its cadres and teachers were recruited from some famous schools of Beijing, Shanghai, and Guangzhou. The first principal, Jin Shiru (金式如), was the vice-principal of a well-known middle school in Shanghai, and the first dean came from Guangdong Experimental School, the most famous middle school in Guangdong Province. Based on the concept of “sound personality education”, SES applied elaborate management and emphasized the role of teachers’ demonstration of words and deeds and family parenting in children’s quality education. In knowledge teaching, English was taught from year one in primary

320 Shenzhen's good middle schools, among the people, have statements of top four and top eight. The top four refer to , Shenzhen Foreign Language School, SES and Shenzhen Senior High School. The top eight includes Hongling, Yucai, Cuiyuan and Baoan. Regarding primary schools, there are three to four famous ones in each district, such as Luoling, Cuizhu, Jintian in Luohu District, Liyuan, Yuanling, Meilian in Futian District, and so on. 321 It refers to the first public school built by the municipal government of SSEZ after its establishment. Shenzhen originally belonged to Bao'an County. Before the establishment of SSEZ, there were some public schools in Bao'an County. For example, Shenzhen Middle School, one of the top four schools, was founded in 1947 and became the only key school of SSEZ in Guangdong Province in 1983. There were also some public schools built by the district government that preceded the construction of Experimental Schools, such as Yucai School in Shekou Industrial Zone. 182 school (English was taught from year seven in other schools). Mathematics in year one used a self-compiled experimental textbook, which focused on the training of intelligence and ability. The unified national textbook was adopted from year two. Although it was a supporting facility of Baishaling community, as a municipal school, SES did not enroll students compliant to the school catchment, but all children of Shenzhen could apply for it. The enrollment of kindergarten and primary school was decided by interviews (including interviews with parents) and drawing lots when junior and senior high schools selected students by examination. Students studying in experimental kindergarten and the primary school could go straight to junior high school. After several years of practice, the educational concept of SES had taken root and been passed on to the next cohort. Students who graduated from the school generally showed the quality of physical and mental health, and their academic performance was also at the forefront of the city. Shenzhen people gradually recognized it as a famous school.

As a measure to expand high-quality educational resources, Huanqiang Middle School (华强中学), which was under the jurisdiction of Futian District, was incorporated into SES in 1998 and became the Junior High School Teaching Department. Huaqiang Middle School was a district school, applying the school catchment enrollment policy. Since then, SES also began to follow the catchment policy. In 2001, appointed by the municipal government, SES merged the Asia-Pacific (Shenzhen) International School, which was in debt, and established the Senior High School Teaching Department. Shenzhen Experimental Education Group was founded on September 3, 2003, which was the first public education group in Shenzhen initiated by SES322. In 2017, also appointed by the municipal government, the Bantian Teaching Department was founded to bring high-quality educational resources to the Bantian area. The Guangming Teaching Department in Guangming New District was open in 2018, which was a boarding senior high school.

The establishment and development of SES indicated that since education was a public service responsible by local governments, the formation of a good school firstly relied on the government positioning. From the beginning, SES was a high-quality school founded by the municipal government. Huaqiang Middle School and Xincheng School were merged into SES through the administrative decision of the government and became famous schools pursued by Shenzhen parents. Every district in Shenzhen hopes that famous schools, like SES and Shenzhen Middle School will run schools in their district to increase high-quality educational resources. However, the interviewee

322 Shenzhen Experimental Education Group currently has six public school departments and four educational institutions. Among the public schools, Middle School Department, Junior High School Department, and Primary School Department are in Baihua zone, Futian District, with total area of 80,000m2, Senior High School Department is in Nanshan District, with the area of 70,000 m2, Baitian Department is in the Yangmei Community, Longgang District, with the area of 48,000 m2, Guangming Department is in Guangming New District, with the area of 93,600 m2. The four educational institutions are preschool education center, education training center, dental clinic and teachers and students service center. More information see the official website http://www.szsy.cn/category/category/402881e856e3516f0156e4659312000e.shtm (access on 28/5/2019) 183 said that besides the government's positioning, whether a famous school could be formed depended on the educational concept and management. Many district schools initially had a high positioning with sufficient investments, and eventually fell into the second or third class. That was just because of the poor implementation of the concept and poor management. Consequently, the public did not recognize them as famous schools. On the other hand, as for the Experimental Education Group itself, there was no great willingness to run schools in different districts, because they were government-funded, not profit-making commercial education institutions. Expanding into running school would only increase the pressure of the Group's operation. To truly run a branch school, the Group would need to dispatch cadres and teachers who had been working in the school for many years from other teaching departments, which would dilute their high-quality human resources. Achievement might not be seen in a short period, because it took many years to train good teachers, and it also took a long time to integrate culture and idea to turn a school into the SES pedigree. A real famous school could not be made immediately just by changing a name, which, however, parents might not understand. All the parents did was to send their children to a good school to relieve their worries. When the expectation was not satisfied, complaints and resentment arose, which would damage the reputation of the Experimental School. b). How Developers Made Famous Schools? Contrary to the caution in expansion of public schools, which was represented by SES, developers used people’s pursuit of high-quality educational resources to develop into powerful means to promote their products, creating the concept of educational/cultural real estate, even forming a model for replication. Most of the famous traditional schools were concentrated in urban built areas, where the surrounding areas had been developed. The soaring property prices and rapid turnover only made the agents of the three-tier real estate market happy, which was meaningless for developers who were constantly building new projects. Developers needed to find another way to tie up with education. b.1) The Case of Biguiyuan International School The classic case is the project of Shunde Country Garden (顺德碧桂园). In 1992, Yang Guoqiang (杨国强), the founder of Country Garden Group323, developed his first project, Shunde Country Garden, which was a villa project with a land area of 1800mu. The project was in a remote area with inconvenient transportation and incomplete supporting facilities. Even worse, it unfortunately met the macro-control started in 1993. Only a few villas were sold, which was expected to become an abandoned site. To save the project, Yang adopted Wang Zhigang’s 324 proposal to build Biguiyuan

323 Country Garden was founded by Yang Guoqiang in 1992. Now it is one of the largest real estate enterprises, listed on Hong Kong Stock Exchange’s Main Board. It ranks among “The World’s 500 Largest Public Companies” as per Forbes. Country Garden is not just a developer and operator of residential communities, but also constructs and operates green, ecological and smart cities. In 2016, Country Garden’s residential property sales exceeded USD43 billion, covered approximately 37.47 million square meters, and ranked among top three real estate enterprises globally. More information see https://en.bgy.com.cn/about.aspx (access on 30/5/2019). 324 Wang Zhigang (王志纲), was born in August 1955, is a famous consultant in China. He graduated from 184

International School which was the first exclusive private school in Guangdong Province. To run Biguiyuan School well, Yang used all available resources. With the help of Liao Bingquan, the first principal, Biguiyuan and Beijing Jingshan School325 reached a three-year cooperative school-running agreement. 326 Through radio advertisement, Biguiyuan Jinshan School soon became very famous in Guangdong Province and in Hong Kong, enrolling 3000 students for the first time. Not only did the school drive the sale of houses out, but it also raised several hundred million yuan by collecting 300,000 yuan per student upon enrolment as an education reserve fund.327 This ‘interest-free loan’ freed Yang from the threat of shortage of funds, also became the capital of his expansion and development. From then on, the exclusive private school became the standard matching in all projects of Country Garden, achieving the legend of “real estate + education”. Biguiyuan International School was the first officially authorized International Baccalaureate (IB) school in China, providing Primary Year Program (PYP), Middle Years Program (MYP), and Diploma Program (DP). Its university enrollment rate was 100%, 30% of whom were enrolled by the top 50 universities in the world. Dreams of entering world famous universities, like magnets, helped the Country Garden attract numerous consumers who wanted their children to enjoy high-quality teaching resources. It can be said that the Biguiyuan School made Country Garden successful, which finally developed into one of the greatest real estate enterprises in China. In 2014, Country Garden integrated all its educational resources to set up the Country Garden Education Group, which was renamed Bright Scholar Education Group328 in May 2017, and then listed on the main board of the New York

the Department of Economics of Lanzhou University in 1982. From 1982 to 1984, he was engaged in the research of economic theory in the Academy of Social Sciences. From 1985 to 1994, he was a reporter of . In the second half of 1994, he became an independent planner. Wang Zhigang Studio was founded in 1995 and he himself was chief planner. He was deeply involved in the process of China's marketization and urbanization, and carried out strategic planning for thousands of enterprises and hundreds of cities. Yang Guoqiang’s initial intention was to use Wang’s status as a journalist to help in advertisement, but Wang said that Yang could not save the project without major action, so he planned an international school and a five-star club for Biguiyuan. From then on, the slogan of Biguiyuan was “to give you a five-star home”. 325 Beijing JingShan School was founded in 1960, and became one of the national key schools in 1977. It provides 12-year education from primary school to senior high school. It is a well-known school in China. 326 Liao Bingquan (廖秉权), who was the vice-editor of Guangdong Higher Education Publishing House, was hired as the first principal of Biguiyuan international School at a high salary. And Liao's classmate Cui Mengming (崔孟明) was the principal of Beijing Jingshan School at that time. These private contacts led to the cooperative school-running agreement. 327 Education reserve funds were a popular financing mode of private schools in the Pearl River Delta in the 1990s. It was a one-time fee collected when students enrolled into the school, which was used for the daily management and operation of the school. The amount ranged from 100,000 to 300,000 yuan. It promised that the capital (without interest) would be refunded within one year after students transfer or graduate. Essentially, this was a disguised financing method. Many school investors used this money not for school operation and management, but for other investments. If the investment failed, the education reserve fund could not be returned. As mentioned above, the acquisition of Asia-Pacific International Schools by SES was due to the fact that the International School was unable to repay the education reserve fund, and the government asked SES to help cleaning up the mess. In fact, there were many disputes because the reserve fund could not be returned. So, in 1998, the Guangdong Provincial Government decided to prohibit private schools from collecting the education reserve funds. On December 29, 1999, the Guangdong Provincial Education Department put forward “Suggestions on Solving the Problem of Educational Reserve Fund of Private School”. Then, the provincial government office forwarded the document Guangdong Provincial Government No.6 to the municipal and county governments and relevant departments. More information see http://www.gd.gov.cn/gkmlpt/content/0/136/post_136969.html (access on 30/5/2019) 328 Education Group changed its name in order to make its brand de-Country Garden and more conducive 185

Stock Exchange.

From the case of Biguiyuan School, it is not difficult to find out that the most direct way to tie up with education is to create a famous school in one’s project. The planning and design code of urban residential areas requires each residential area to be equipped with schools329. In the previous planning management system, schools were included in the parcel of land that developers obtained. Developers decided the numbers, size, and location of schools according to residential population prediction. Upon completing construction, schools were transferred to the local government, who was responsible for running schools. Most developers did not like to build schools in their projects, especially projects in a good location but small land parcel, because schools occupied part of the land and had to meet various special planning and design codes. Moreover, many people did not like their houses too close to a school because of the noise of the school bell, reading aloud, broadcasting, playground activities. Some developers, especially for large-scale suburban projects with imperfect public facilities, would use this opportunity to make a famous school to create a sales highlight for the project. b.2) The Success and Failure of State-owned Private School There were three ways for developers to make famous schools. The first way was to negotiate with the government to get the right for running the school, creating its educational brand, or introducing a well-known educational brand. This kind of school was called a state-owned private school, which was a non-profit educational institution. As there was no government funding, the school charged a tuition fee, which would not be as high as the fee of an exclusive private school, like Biguiyuan School. For example, Shenzhen Sinolink Primary School (百仕达小学) was founded in 1999, which was the supporting school of Sinolink Garden (百仕达花园). The developer was based in Hong Kong, and many buyers were also Hong Kong people, so Sinolink Primary School adopted the Hong Kong mode to run the school, implementing small class sizes (32 students in a normal class, and 16 students in English class), and using an English textbook in Hong Kong version. The original purpose of running Sinolink Primary School was to satisfy the needs of the buyers’ children to obtain Hong Kong-mode education so as to connect with the secondary education in Hong Kong, which was also a sales highlight of the houses for Hong Kong buyers (see photo 5.3). The majority of the students enrolled were owners’ children of Sinolink Garden, and other students were enrolled through examinations if there were spare places. It was unexpected that such educational methods as small-class teaching, strengthening English teaching and etiquette education, were sought after by many parents. Sinolink Primary School to focusing on the development of international education professionally. As of August 31, 2018, Bright Scholar Education Group has 6 international schools, 15 bilingual schools and 44 kindergartens in 8 provinces, with more than 36,000 students. For more information, see http://www.sohu.com/a/289717391_120030331 (access on 30/5/2019). 329 According to Code for Planning and Design of Urban Residential Areas GB50180-93, which was used since 1993, school were built based on the population of residential areas. Now, schools are designed according to 15-minute pedestrian-scale neighborhood and 10-minute pedestrian-scale neighborhood after the Code for Planning and Design of Urban Residential Areas GB50180-2018 was implemented since December 1, 2018. See Appendix B.0.1, C.0.1 of Code for Planning and Design of Urban Residential Areas GB50180-2018. 186 gradually became a well-known private school, which not only attracted Shenzhen students but also students from other cities. But instead of developing the education industry, Sinolink company adhered to the principle of running a school delicately and serving the owners, so it enrolled only 128 students in four classes per year and never expanded its scale. The competition for the enrollment in Sinolink Primary School was fierce every year that thousands of children handed in their application forms. The most direct way to get a place was to buy a house in Sinolink Garden, which was also in the catchment of Dongxiao campus of Cuiyuan Middle School (翠园中学), which was the best middle school of Luohu District. Therefore, the average housing price of Sinolink Garden was usually over 30% higher than that of Luohu District.

Photo 5.3: advertisement of Sinolink Garden

source: Shenzhen Real Estate Association, ed. Classical Properties Advertisement (Shenzhen HK Guangzhou). (Nanchang: Jiangxi People Publishing House, 2002), 60.

Vanke took a similar approach in the project, Shenzhen Wonderland, but failed. The main reason for the failure lay with the owner rather than in Vanke. Built in 2002, Huacheng Primary School (花城小学) was the supporting school of Vanke Wonderland. Vanke negotiated with the government of Longgang District to run the school as a state-owned private school that Vanke paid all start-up fees and charged tuition fees as daily operating expenses. In order to make it a good school, Vanke introduced SES as the school-running party and its initial name was Shenzhen Experimental Wonderland Primary School. SES sent out a team, including major cadres and teachers, to make the school running successful, and the parents satisfied. But three years later, because some parents, mainly owners of Vanke Wonderland, thought that it was unreasonable to charge tuition fees for compulsory education, they requested

187 the government of Longgang District to take it back and turn into a public school. After multi-party consultation, the school-running contract with SES was terminated in August 2005. The school was changed back to the public school and renamed Huacheng Primary School. After the withdrawal of SES, the follow-up team appointed by the government did not maintain the level of teaching and management. Huacheng Primary School gradually became an ordinary public school and lost the opportunity to become a famous school. 330 Those owners of Wonderland who had caused the trouble were regretful that their children lost the chance to study in a good school. Meanwhile, their properties lost the opportunity for rapid appreciation through being located in the catchment of a famous school. The tuition fee of a state-own private school was actually affordable. In order to keep their children in SES, some owners of Wonderland had to pay several times as much than the price of their Wonderland’s houses to buy or rent a school-housing in Baihua zone. An owner of Vanke Wonderland said that she could not afford to buy a two-bedroom apartment in Baihua zone with the money she sold her Wonderland duplex house with the area of 200+ square meters, not to mention the excellent community environment and property service when comparing with the Baihua zone. But he family still moved to Baihua zone for the sake of her child’s education. Vanke’s attempt to tie up its project with education failed under the intervention of the owners. It was estimated that the owners did not anticipate the withdrawal of SES, or did not realize that the team of SES played such a key role in teaching and school management that it was hard to maintain the quality by the follow- up team. They also did not expect that the competition for high-quality educational resources in Shenzhen would become so fierce in a few years, and the housing prices around a famous school would increase more than ten times. The government, the developer, and the owners were all losers in this group intervention event. For Vanke, the loss was that in the following development of phase 4-7, the houses could not be sold out faster and at higher prices. The government of Longgang District lost a famous school which could enhance the regional value and had to send a team of cadres and teachers and make a financial allocation to the school. This event also indicated that in 2005, the educational resources were not so tight, and the pursuit of famous schools was not so fierce. After all, since 2008 the housing prices in Baihua zone kept rising all the way. b.3) Excellence Group’s Successful Experience The second way for developers to make a famous school was to introduce a famous school and pay the related introduction fee and part of annual operation costs, but maintain the public nature of the school. The district government and the introduced school signed the cooperation agreement directly. This was a way that the government would like to favor, so that to expand high-quality educational resources and enhance regional value for the district, without causing public dissatisfaction as a private school charging tuition fees. It was also a better way for developers who did not intend to develop education business because there was no follow-up issue after the successful introduction of a famous school. The effect of the famous school on real estate projects

330 Information collected from interviewees. 188 was long-lasting, which was the best advertisement for the follow-up phases of the project. Excellence Group (卓越置业集团) adopted this model in its super-large development in Nanshan District, the project of Great Azure Coast (卓越蔚蓝海岸), which started construction in 1999, providing 5,000 residential units from 70 square meters to 230 square meters. Compliant with planning codes, two kindergartens, one primary school, and one middle school were built in this project, all of which were entrusted to Beijing Normal University for operation and management. Nanshan District government and Beijing Normal University signed a cooperation agreement on running the school, and Excellence Group promised to provide 2 million in operating fees per year. Nanshan School Attached to Beijing Normal University was started in September 2000, running as a twelve-year public school. The reputation of Beijing Normal University was an important selling point of the project (see photo 5.4), bringing great added value. In the Autumn Real Estate Fair of Shenzhen in 1999, the media rated Great Azure Coast as the most popular development, and in the Spring Real Estate Fair of 2000, according to the market survey of the Shenzhen Real Estate Trading Center, the project was ranked first in the overall ranking.331 Nanshan School Attached to Beijing Normal University has become a well-known school in Nanshan District. In 2018, it achieved the undergraduate admission rate of 95% and the key undergraduate admission rate 30%, being ranked 12th of all Shenzhen schools. The average housing price of Great Azure Coast was about 40% higher than that of Nanshan District. The third way was the Biguiyuan model, setting up an exclusive private school, and creating its educational brand. But for the first three years of Biguiyuan School, it needed to rely on the reputation of Beijing Jingshan School, that was to say, it had to take the first step depending on the high-quality educational resource recognized by the public.

Photo 5.4: advertisement of Great Azure Coast

Source: Shenzhen Real Estate Association, ed. Classical Properties Advertisement (Shenzhen HK Guangzhou). (Nanchang: Jiangxi People Publishing House, 2002), 58. b.4) Educational Foundations Run by Big Enterprises Nowadays, many real estate enterprises set up educational foundations for educational investment and running schools. For example, Vanke founded Vanke Education Development Foundation in 2015, and education become an independent

331 Wei Mao and Xiaomo Wang. Revolution of Living (Beijing: Haichao Press, 2000), 187. 189 department in Vanke’s business transformation. Vanke Education Development Foundation cooperated with Shenzhen Middle School in 2015 to establish Vanke Meisha Academy (万科梅沙书院), an international school specializing in connecting with university study abroad programs. Vanke's education business not only explored various modes of the full-time teaching system but also actively built the quality- education bases, including urban camps, community camps, and outdoor camps.332 Vanke Education was still in the exploratory stage and did not found a viable and scalable business model, but its purpose was clear, that was to improve its new concept, building a customer life-cycle ecosystem, which would provide all-round daily life services for Vanke customers. Vanke recently upgraded its education department to a business sector, and the chief executive officer of Southern Regional Business Group, also a senior vice president of Vanke Group, has been transferred to the CEO of Meisha Education Sector333, which showed the determination of Vanke to develop education.

Many large-scale enterprises in other industries also begun to invest in education. For example, Tencent (腾讯) Foundation cooperated with the government of Futian District to establish the Shenzhen Mingde Experimental School (明德实验学校) in September 2013, which was the first non-state-run public school in Shenzhen and a new cooperative mode of running schools. The government provided school land-use, school buildings, and teaching equipment, and allocated educational subsidies according to the expenditure standard per student as was the practice in other public schools. Also, the school received a large amount of Education Fund provided by Tencent every year, which was used to subsidize the salaries of principals and teachers, as well as teaching incentives, reform, and innovation. According to the “Framework Agreement on Cooperative Running of Schools”, the Shenzhen Mingde Experimental Education Foundation and the Mingde School Board, which were jointly composed of the Futian District Government and Tencent Foundation, were the main management bodies of the Mingde School and implemented the principal responsibility system under the leadership of the board of directors. Mingde School adopted a small class system with 35 students in each class and carried out several reforms in teaching management techniques. Within a few years, Mingde School quickly became a school recognized and sought after by the public. In 2016, Mingde School merged Bihai Primary School in Futian District into Mingde education system and established Bihai Campus. The enrollment of Mingde School was in full compliance with the principle of the catchment enrollment and scoring method promulgated by Futian Education Bureau334 (except for the quota reserved for Tencent employees each year). The Xiangmihu (香蜜湖) area where the Mingde School is located and the OCT area where the Bihai Campus is located are already luxury residential areas in Shenzhen, but the Mingde School had an even greater effects on the average housing price in these two areas soaring to the top of Shenzhen.

332 See China Vanke Co., Ltd. Vanke Annual Report 2017. 333 See http://www.vankeweekly.com/?p=86053 (access on 2/6/2019) 334 More information see the school official website https://www.mingdeschool.org/ (access on 1/6/2019) 190

Large companies, like Tencent, invested in education not only to benefit itself in tax revenue and social reputation but also to help local governments expand high-quality educational resources to benefit society. However, Mingde schools are located in luxury residential areas, coupled with the stimulation of the famous school effect on the house price and rent, they are no longer high-quality educational resources that ordinary families can enjoy. If Tencent could promote other enterprises to make the same contribution in education and popularize high-quality educational resources, that would be the good fortune of most Shenzhen families. However, the current situation in Shenzhen was that the number of school places was very limited. District governments were busy solving the problem of insufficient places and have not yet tackled the problem of popularization of high-quality resources. Each district could only make one or two famous district schools as demonstrations and individual achievements of government officials.

In addition to Tencent, several well-known Internet and high-tech companies in China also invested in education. For example, in cooperation with Tsinghua Affiliated , Huawei established an international school, A+W Academy (爱为 书院), in 2017 in Dongguan Songshan Lake High-tech Park, where Huawei Terminal Headquarters are located; Alibaba Partners invested in the establishment of Hangzhou Yungu School in 2017; Jingdong (京东) announced in October 2017 that it would introduce Renmin University of China Affiliated Secondary School in the Yizhuang (亦 庄) Development Zone in Beijing, and that the construction would be completed and the school would open in two years. The government strongly supported these companies to set up branches of famous schools in their industry parks, solving the problems of children's education for their employees and providing more educational resources for society. However, these are private schools which charge high tuition fees, although the enrollment is not restricted by school catchment. It is obviously unaffordable for ordinary families. b.5) Making Famous School in Surrounding Cities The shortage of educational resources in Shenzhen, especially the shortage of high- quality resources, have made the surrounding cities sell their real estate products to Shenzhen consumers with education as a selling point. Huizhou city (惠州), located in the eastern part of Shenzhen, has long been selling houses to Shenzhen people with the selling point that their housing prices were much lower than that of Shenzhen. With Huizhou incorporating into the Guangdong-Hong Kong-Macao Greater Bay Area, as well as the construction plan of intercity track and the concept of Shenzhen-Huizhou one-hour living circle being carried out, the Dayawan District (大亚湾区), which is closest to Shenzhen, advertised itself as the first destination for Shenzhen to expand eastward, undertaking Shenzhen’s industrial transfer and population spillover. Dayawan District strove to create a high-quality living and educational environment to attract Shenzhen consumers. The Special Planning for Kindergartens, Primary and Secondary Schools in Dayawan District (2018-2022), released in February 2019,

191 proposed that in the planning period, 36 kindergartens would be built to add 13,195 pre-school places and 21 primary and secondary schools would be built to add 33,180 places. It also proposed to actively promote cooperation in running schools with domestic/abroad well-known educational resources.335 Before this planning, Dayawan District has introduced some famous schools. In 2017, the Huizhou Municipal Government signed a strategic cooperation framework agreement with Guangdong University of Foreign Studies. The primary school and junior high school of Guangwai Dayawan Foreign Language School was opened in September 2018. Developers always had foresight in the linkage of real estate and education. As early as in 2012, the Huizhou Galaxia Dante (developed by Galaxy Holding Group based in Shenzhen) introduced the Middle School Attached to South China Normal University, one of the most famous schools in Guangdong Province, which created a sales myth for five consecutive years. In 2015, the Middle School Attached to Central China Normal University was introduced to Huizhou Logan City (developed by Logan Property based in Shenzhen). When Excellence Group developed the eastern Great Azure Coast in Huizhou, it successfully cooperated with Beijing Normal University again to open a branch school. The interesting thing was that these developers were all from Shenzhen. They brought Shenzhen's successful experience of bundling education to their new projects in other cities and sold it back to Shenzhen people. Education must probably be the most lasting selling hotspot of houses. In the case of insufficient urban space and shortage of educational resources in Shenzhen, it is a solution to relieve the problem with the help of other cities in the Greater Bay Area. However, education is one of the basic public services related to every family and an important aspect of reflecting a city's human settlements environment. However educational resources are provided, they should be under the government’s overall planning and control.

5.2.5 Governments’ Action In the early stage of Shenzhen's urban development, schools were positioned by the government and provided government resources according to different positioning. After the commercialization of housing, it was usually the developers which built schools. They participated in the school positioning for the sake of their housing sales and even grasped the initiative sometimes. Some developers introduced a famous school and ran it seriously. But some just pasted a famous brand for the housing sales temporarily, without putting in good teachers and management. In the long run, the glory brought by the famous school faded away, and the school became an ordinary school. Shenzhen Taoyuanju (桃源居) is a super large-scale community with a total floor area of 1.8 million square meters. It introduced Tsinghua University to establish Shenzhen Tsinghua Experimental School. In the beginning, it attracted so many parents that the houses were quickly sold out as owners had a big discount on tuition fees (see photo 5.5). However, the teaching performance was not as good as people’s expectation. In addition to the dispute between several shareholders, Tsinghua

335 For more information, see the official website of Dayawan District http://www.dayawan.gov.cn/pages/cms/dyw/html/news-zwyw- df6320bc839f49d8ae61cb055891c5fa.html?tmp=0.2516299925753297 (access on 2/6/2019) 192

University eventually withdrew and the school renamed as Shenzhen China-Australia Experimental School in 2016. This case proved that the quality of running a school could not be guaranteed if it was not effectively supervised when the developer lost the motivation to run the school after completing the sales mission.

Photo 5.5: advertisement of Taoyuanju

Source: Shenzhen Real Estate Association, ed. Classical Properties Advertisement (Shenzhen HK Guangzhou). (Nanchang: Jiangxi People Publishing House, 2002), 51-52.

According to the current residential planning requirements, the location and scales of schools were determined in the stage of regulatory planning. Local governments were responsible for school positioning and construction. Schools plots were no longer packaged in residential development by developers. It was also stipulated that developers could not bundle schools as sales advertisements. However, when developers developed a high-end real estate project, bringing in high-quality population and attracting follow-up investments, it was indisputable that they wanted some matching high-quality educational resources. Moreover, governments themselves did not have sufficient financial and human resources to cope with the pressure of insufficient public facilities brought about by the increase of population. Therefore, governments would cooperate with developers to introduce famous schools or support them to run private schools, which was one of the efficient ways to use social capital to increase high-quality educational resources. For schools, they would have the opportunity to expand their scale and influence, to form the brand of the educational group, and to provide more opportunities and growth space for teachers. But as mentioned above, the expansion of educational groups should not be too fast. Otherwise, the resources of high-quality cadres and teachers would be diluted to affect

193 the teaching quality and school management, that eventually made the school ordinary, without any difference except for pasting a brand name. There was a game among the government, developers (enterprises) and schools to balance their needs and interests, and the ultimate impact was on each family. In this process, what role should the government play to balance the interests and ultimately benefit each family?

Since the third plenary session of the Eighteenth Central Committee of the CCP in 2013, the educational reform and development strategy of "separation of supervision, operation, and evaluation”336 has been clearly defined. The educational departments of governments at all levels have been busy coping with the state policy, building several demonstration schools through cooperation with enterprises, or hiring highly- paid principals throughout the country, which were then widely publicized by the major media. How could this be fair to a large number of principals and teachers in public schools? There were many new or expanded schools in Shenzhen every year, but it was impossible for every school to recruit a principal with a salary as high as a million. Even if a high-priced principal was recruited, he/she might not necessarily improve the quality of education, let alone know how to promote the independent running ability and improve the quality of all public schools. High-quality teaching resources were still concentrated in limited schools and people. Families without Shenzhen household registration were still worrying about getting a place, while middle-class families were competing for high-quality educational resources.

Ordinary people in China were very sensitive to educational issues. As long as the interests of their children were involved, they would desperately safeguard their rights. There were disputes caused by children's enrollment in school every year. In the enrollment of junior high school of SES in 2012, according to the classification method at that time, the number of students who were in category A exceeded the total places. The school made an artificial subdivision according to the time of buying houses, giving priority to the children whose families had bought houses for a longer time. More than one hundred parents whose children did not get the enrollment protested at the entrance of the municipal government office building. Ultimately, the government could only compromise and distribute students among several good schools337. This event led to the implementation of the scoring system from 2013. In 2015, because the price of school-housing rose too fast and the number of enrolled students was too large, the regulations of school-housing lock-up (six years in primary school and three years in junior middle school) were promulgated. The government constantly refined the

336 The “Outline of the National Mid-long-term Education Reform and Development Plan (2010-2020)”, published in July 2010, initially put forward the idea of "separation of supervision, operation and evaluation". In November 2013, the Third Plenary Session of the Eighteenth Central Committee formally defined the educational reform and development strategy of "separation of supervision, operation and evaluation". At the National Annual Conference on Education held in January 2014, Yuan Guiren, the Minister of Education, made a principled explanation on the "separation of supervision, operation and evaluation", that was "government macro-management, school running independently and wide participation of society". On May 4, 2015, the Ministry of Education issued "Several Opinions on Promoting the ‘separation of supervision, operation and evaluation’ and Promoting the Change of Government Functions" 337 Information collected from interviewees. 194 conditions for enrollment, reflecting the growing contradictions in education. But these regulations only played a restrictive role and could not solve fundamental problems.

Not only famous school like SES, but every school with a good reputation has become the target of parents’ competition. For example, the Vanke Lucheng Foreign Language Primary School, which opened in 2015, was a supporting school of the Vanke Lucheng Project (万科麓城). Upon construction, the school was transferred to the Longgang District government, and Vanke Education Development Foundation got the contract to run the school. According to an informed interviewee, Vanke employed the retiring principal of Futian Liyuan Primary School (荔园小学) with an extremely high salary to manage the school and earned a good reputation. As a public school, its enrollment catchment was defined by Longgang District Education Bureau, which included the surrounding Iihu community and Yicui community. In the first two years of the school, the shortage of school places did not emerge because there were not many residents in Vanke Lucheng. By 2017, with the increase of households and the rapid increase of children in school age, some owners’ children of Vanke Lucheng could not enroll in Lucheng Primary School because their points were lower than those of the residents in surrounding communities. The residents of Lucheng protested and demanded that Longgang Education Bureau adjusted the admission rules to give priority to children in Lucheng Community, while residents of Lihu Community and Yicui Community argued that public schools should fairly enroll according to the school catchment and points which was defined by the government. The government finally ruled that enrollment could only be based on the published school catchment and points system of that year, and would adjust according to the number of children in each community in the next year.

Public schools’ enrollment wanted to reflect the fairness of compulsory education but led to the abnormal rise of school-housing prices. Ordinary people eventually blamed social injustice, which aroused more resentment and anger. This was a situation that the government did not expect. Moreover, the enrollment upon catchments was contrary to the principle of “separation of supervision, operation, and evaluation” in the educational reform. Although public schools were advocated to run independently, they needed to enroll students according to the catchment and scoring method defined by governments, thus, even the independent enrollment could not be realized. Students also had no rights to choose schools independently. The founder and the first principal of SES, Jin Shiru, foresaw the shortcomings of the current catchment and the result in competition for school-housing. He put forward the concept of the large catchment more than ten years ago; that was, putting several schools at different levels into a large area and deciding to enroll in which school by interview and drawing lots. As there were different levels of schools in a large catchment, buying a house next to a good school was no guarantee to enroll in this school, which could reduce the possibility of irrational speculation of school-housing. But somehow this proposal was not adopted at that time. Now some districts were experimenting with some large catchments. But this method could only be implemented when there was no great

195 disparity in housing prices in the area. It was impossible to implement in Baihua zone nowadays because people spent more than 10 million yuan on buying school-housing, but being assigned to a low-level school with the surrounding housing prices less than half of the prices they paid. The result would inevitably lead to mass incidents aroused by families who purchased expensive school-housing, which was the last thing the government expected. All kinds of cases showed that the educational reform carried out by the government has not touched on the core issues, and has not solved the most concerning problems of ordinary people. Moreover, the current government only relied on one or two school-running cases to propagate and respond to the requirements from the upper-level government.

5.2.6 Conclusion School-housing in Shenzhen was certainly not a unique phenomenon, but unlike some first and second-tier cities which had many famous private schools, the quality of private schools were generally lower than public schools in Shenzhen. The top ten schools in Shanghai were almost private schools. Many families who could afford tuition fees would choose private schools, invisibly leaving more public schools to ordinary families. Comparatively, most of the famous schools in Shenzhen were public schools, so all the people went after these few good schools. In addition, Shenzhen had left many gaps in public facilities such as schools and hospitals in its early development. Compared with Beijing, Shanghai, and Guangzhou, which have a long history and have a progressive development of education, Shenzhen is short of schools, especially high-quality resources, which has promoted the irrational prices of school-housing and resulted in more real estate projects tied to education.

It was undoubtedly good to make up for the shortage of education with the help of enterprises. But the tie-up between education and real estate was currently limited to the level of interests, which ended upon the completion of the purchase transaction. Just as Wang Shi suggested that the development of the community was just starting when the household began to move in. Only when the binding of education and housing was not temporary, but a long-term relationship, the community could fulfill certain social education responsibilities and the binding relationship was of great significance. For example, working parents were unable to take care of their children’s eating and rest, entertainment and study after school, which has resulted in various institutions running in many residential communities in Shenzhen, providing training classes and noon/evening care with different qualities and expensive fees. If the residential community sent buses to take the children back to the community after school, arranging lunch, setting up game rooms and study rooms for children to be entertained or study, and even having some good quality tutors helping children’s study, the families in the community did not worry about the safety and food of the children, and there was no need to look for expensive day-care or home-work tutoring classes outside. This kind of community education service would undoubtedly impress buyers and establish more lasting customer relationship.

196

At the government level, when the officials were concerned not only with the short- term success of their tenure, but the long-term development of urban education, they could do something down-to-earth which was not effective in the short term, but important in the long run. For example, if the large catchment could not be implemented immediately, a future time node could be set up, like in six years (just after the six years lock-up of the place in primary schools), during which continuous propaganda would be carried out so that the public could have a period of time to accept and adapt to the new rule. But the officials would rather do nothing for fear of mass incidents affecting their performance in their tenure. For another example, if the cost of hiring a high-priced principal was effectively used to improve the teaching quality in several schools, the overall quality of education would be improved over time. But the fact was that in the officials’ tenure, limited funds were spent on one or two schools for praise by the upper-level authorities. Only when the government transforms into a service-oriented government, rather than a GDP government or a performance- oriented government, can the contradictions in education be fundamentally solved.

The importance of education for the future development of the country is not the focus of discussion. It is to emphasize that education is an important issue in the daily life of ordinary people. Especially nowadays when education is tied up with housing, solving the problem of education can make most families enjoy settlement in a city, which is a crucial point in the competition of talent and resources.

5.3 Age Care

5.3.1 Aging trend According to the criteria set by the United Nations "Population Aging and Its Socio- economic Consequences" in 1956, when the proportion of the elderly population aged 65 years and over in a country or region exceeded 7% of the total population, it meant that the country or region had entered the aging society, reaching 14% was deep-aging society, and up to 20% was super-aging society. In 1982, the Vienna World Assembly on Aging Issues set that if the proportion of the elderly aged 60 years and over in the total population was more than 10%, the country or region was regarded as an aging society. Whatever the criteria, according to the data of China National Census (see table 5.7), China has become an aging country from 2000. From 2000 to 2010, the average growth rate of the population aged 65 and over was 2.39%. At this rate, China will enter deep-aging in 2030 and super-aging in 2045. Aging is a serious problem facing or about to be faced by countries all over the world. Shenzhen is the youngest city in China. In the 2010 Census, 1.76% of the population over 65 years old (see table 5.8) was far below the national average. Shenzhen's aging problem seemed to be far away from Shenzhen people. However, it must be noted that from 2000 to 2010, the average growth rate of the elderly population in Shenzhen was 5.86%, which was much higher than the national average growth rate, 2.39%. On the one hand, it showed that the early builders of Shenzhen have entered the aging stage; on the other hand, more and more families have settled in Shenzhen and brought in the elderly. This was

197 similar to the population of children aged 0-14, which the proportion was much lower than the national level, but the growth rate was much higher. During the 40 years of reform and opening-up, Shenzhen has created an astonishing speed of development by relying on a large number of working populations from the whole country. The low population of children and the elderly have made Shenzhen underdeveloped in public facilities such as education, medical care, and pension services. Now the problem is gradually emerging. The contradiction in education is the proof, and the aging problem in Shenzhen is inevitable and should be taken into serious consideration in advance.

Table 5.7: national data of the National Census of 2000 and 2010 national data of the national data of the average growth rate age 2000 Census (%) 2010 Census (%) (%) 0-14 22.9 16.61 -2.75 15-59 66.63 70.08 0.52 60 and above 10.45 13.31 2.74 65 and above 7.19 8.91 2.39 Source: official website of National Bureau of Statistics China http://www.stats.gov.cn/tjsj/pcsj/rkpc/5rp/index1.htm (access on 16/6/2019).

Table 5.8: Shenzhen data of the National Census of 2000 and 2010 Shenzhen data of Shenzhen data of average growth rate age the 2000 Census the 2010 Census (%) (%) (%) 0-14 8.5 9.84 1.58 15-64 90.39 88.4 -0.22 65 and above 1.11 1.76 5.86 Source: official website of Shenzhen Municipal Government http://www.sz.gov.cn/tjj/tjj/xxgk/tjsj/pcgb/200812/t20081202_2061590.htm and http://www.sz.gov.cn/sztjj2015/xxgk/zfxxgkml/tjsj/tjgb/201606/t20160614_3697014.htm (access on 16/6/2019).

5.3.2 Pension issue in China In Chinese traditional culture, filial piety is very important, and supporting the elderly is the natural responsibility of children338, so the traditional pension way in China is family support. Before the reform and opening-up, the population was less mobile, and people's living place was relatively fixed. As the one-child policy339 had not been fully

338 Many idioms in China teach and remind people to support their parents with filial piety, such as 百善 孝为先(Filial Piety comes before all good moralities); 四代同堂(four generations under a household); 养 儿防老(raising children for supporting in old age); 多子多福(more happiness comes with more offspring); 父母在不远游(not to travel far away while your parents being with you). 339 China's family planning policy began in the 1970s. At first, it was not enforced compulsorily, but advocated two children were the maximum number of births. In September 1982, the 12th National Congress of the CCP made family planning a national policy, and the one-child policy began to be 198 implemented, there were siblings in almost every family. The social security regulations were imperfect. Under the combination of all the social and family factors, family pensions conformed to both tradition and reality. However, with the implementation of the one-child policy, China's family structure has gradually become a 4+2+1 model, that was, a couple from only-child families had four older people to support, which overwhelmed family support. The rapid development of urbanization has not only brought many people from the rural populations to cities but also made the flow of urban population more frequent. Therefore, it became normal that adult children and their parents lived in different cities. Moreover, the social pension security and medical security systems were gradually improving, and the economic dependence of retired older people on their children was decreasing. In addition to these objective factors, subjectively, nowadays older people were healthy, knowledgeable, dynamic, and with economic ability, which was quite different from the traditional aging people. They were more concerned about themselves and pursuit qualities of life in all aspects, such as housing, food, clothing, sports, traveling, social activities, wellness, and medical service. Thus, in addition to family pensions, community pensions and institutional pensions have emerged in the past decade. However, these new ways were still in their infancy. In the Special Planning of Pension Facilities in Shenzhen (2011-2020), the planning goal was to establish a pension service system based on home, which relied on communities and was supported by institutions. It was planned to achieve the goal of “9073” by 2020, that was, 90% of the elderly were cared for by families with support of the social security system and service system, 7% of the elderly were provided with daycare and care services by the community, and 3% of the elderly lived in pension service institutions. It indicated that 90% of the elderly still relied on family support.

In the survey from February 2018 to February 2019, regarding the question of parents’ pensions, 56.5% of the 85 valid answers said that their parents were in their hometown. In the question of which pension mode was adopted, 59% of the 83 valid answers were family pensions (see figure 5.2). The answers to these two questions were similar in interviews. Many respondents’ parents chose to stay in their hometown, especially those with other children or relatives in the hometown. Most respondents themselves also tended to family pensions in the future. But their home-based pension plans were quite different from the traditional family pension. Most of them had their own houses and social pension security. Some people also bought commercial pension insurance and medical insurance. So, they did not plan to rely on their children340. They chose to stay at home because they liked the atmosphere at home and the freedom to invite friends and relatives to get together. When they needed to be taken care of, they hoped to get professional nursing service on call from the community or society. At present, many families hire nannies to take care of the elderly at home. But the general quality of nannies is low, as they can only cook and do housework, without any training in

strictly implemented. October 29, 2015, the Fifth Plenary Session of the Eighteenth Central Committee announced that a couple can have two children. 340 some interviewees’ original wording was that they did not want to be the burden of their children. 199 caring for the elderly and patients. Therefore, interviewees proposed professional nurses as they believed that they have the financial ability to get better services. A considerable number of respondents born in the 1960s and 1970s said that they no longer needed a school-housing or to be close to their children’s schools as their children would soon enter high school or university, and they could choose a new house for the sake of themselves. Without the restrictions of schools and education, parents' choices were much freer and more diversified. Generally speaking, apart from the housing layout itself meeting the requirements of use, most of them wanted to live in a beautiful and clean community in a busy area of the city, enjoying both the community environment and convenient transportation, medical treatment, cultural facilities in the city. Therefore, the pension is not just a matter of building specialized nursing homes, but every developer and every community can participate.

Figure 5.2: the result of pension mode survey

Source: based on the data collected by the survey from 2/2018 to 2/2019.

In addition to state-owned nursing homes, in recent years, real estate companies and insurance companies were mainly involved in the pension industry. They have established different pension models in terms of products and operation. As Shenzhen is a young city, the demand for aging products is not comparable to that of some aging cities, so the pension projects of these institutions rarely settled in Shenzhen. But as mentioned above, the growth of aging population in Shenzhen is in an accelerating process. Thus, the analysis of these products will help Shenzhen to form a pension product model suitable for its conditions. The following section will take Vanke as the case study for real estate companies, Taikang ( 泰康) as the case of insurance companies to analyze these two major non-governmental pension industry models.

5.3.3 Vanke’s Pension Scheme

Vanke first mentioned the aging housing and the aging care industry in its 2015 Annual Report. Similar to the development experience of the aging market in the United States, Vanke predicted that in the year 2030, China's aging care and aging real estate would

200 each have 1 trillion market opportunities.341 Therefore, the aging industry became one of the new sectors of Vanke's business transformation. Vanke's first large-scale pension community, Hangzhou Suiyuan Jiashu (随园嘉树)342, was put into operation in 2015. By 2016, more than 600 older people had moved into the community, which became a reception and site for visiting in the 2016 G20 Summit.343

Wanyi Pension (万颐养老) is a subsidiary company of Vanke which operates the pension industry in South China. Its pension business is based on three levels: city, community, and home, forming three major products including Rongyue (榕悦), Zhihui Fang (智汇坊), and Zhihu Jia (智护家).344 Zhihui Fang and Zhihu Jia were developed based on Vanke's built community and would be replicated in all Vanke residential projects. Zhihu Jia was a home-based pension service center in communities, providing private customized door-to-door services. The professional team included doctors, rehabilitation teachers, social workers, etc. It provided a variety of services including health inspection and assessment, daily life care, professional nursing care, rehabilitation physiotherapy, meal delivery, home-space aging adaptation and transformation. This service enabled the elderly at home to receive professional care and relieved the worries of their busy children. Zhihui Fang was a community-based age care center, providing comfortable units with aging-safe design and professional health care services, and organizing elderly activities so that the elderly enjoyed a high- quality aging life in a familiar neighborhood. Zhihui Fang mainly provided short-term care services to the elderly who were in poor health or whose children had left for a while.

Rongyue was a full aged-care center for urban elders, which included two core functional areas, Rongyue senior apartment, and Rongyue nursing home, respectively providing aging care and rehabilitation services for active elders and elders in need of care. Rongyue was an example of urban renewal. It renovated old buildings’ appearance, functions, and interior aging adaptation to not only give the old buildings a new outlook and improve the urban landscape, but also to bring new functions and elements to meet the new needs of urban life. Vanke expanded its new business and helped the government to provide old-age service facilities. For example, Zhuhang Buiding (珠航), an office building built in 1985, has been transformed into Guangzhou Rongyue-Binjiangzhong (榕悦滨江中), which was open in March 2019 (see photo 5.6). Upon moving into Rongyue-Binjiangzhong, the deposit was collected first; then the monthly fee was divided into bed fee, meal fee and nursing fee, and the water and electricity fee was charged according to the actual use (see table 5.9). Compared to the per capita disposable income of urban residents in Guangzhou in 2018 was 59,982

341 See China Vanke Co., Ltd. Vanke Annual Report 2015. 342 Hangzhou Suiyuan Jiashu is an area of the Vanke Liangzhu Culture Village project. It provides 575 residential units suitable for the elderly, with a home care center and rehabilitation center co-operated with Taiwan's professional medical institutions. The whole project is designed to be barrier-free and it is operated by selling the residential right. For more information, see Liu Lijuan. Vanke 30 Years: Product and Marketing (Beijing: China Architecture & Building Press, 2016), 59. 343 See China Vanke Co., Ltd. Vanke Annual Report 2016. 344 More information see http://www.gzvankecare.com/index.aspx (access on 4/6/2019). 201 yuan per year345, the per capita annual fee of Rongyue double room was 73,200 yuan. Therefore, families with lower and middle income had difficulty affording this consumption, but for new middle-class families, this was an affordable price by using parents' pension and children's subsidies.

Most of Wanyi's projects were currently open in Guangzhou. There was only one Rongyue project in Shenzhen, the Futian Welfare Center, which was a private project in cooperation with the government of Futian District. Futian Welfare Center was built in 1998. Its old buildings and facilities, unprofessional service, and low quality made the seniors very unwilling to stay. There were only 88 older people in this 320-bed welfare center when Vanke took over. Since the signing of the cooperation agreement in 2016, Vanke invested more than 10 million yuan in carrying out over 40 aging modifications, adding 100 new beds and increasing the activities area by nearly 1600 square meters (see photo 5.7). In 2018, it was reopened to provide the elderly living, catering, nursing, and various recreational activities. There were a community health service station and a pharmacy, where medical social insurance could be used directly. 420 beds of the Center included 150 policy beds and 270 commercial operating beds. The policy beds were mainly provided to the eligible elderly in Futian District.346 The charges were unified according to the standards of Shenzhen Development and Reform Commission and Shenzhen Civil Affairs Bureau (see table 5.10). The commercial operating beds were open for social application. Vanke set the price according to the market value of Shenzhen's pension industry (see table 5.11). Futian Welfare Center was the first state-owned private pension institution in Shenzhen. By introducing experienced social capital such as Vanke, the hardware and software of the Center were greatly improved, and the original state-owned assets were revitalized. It not only ensured that the policy beds served the elderly with low income but also increased the commercial beds to meet the needs of different levels of pension, thereby achieving a triple-win in government public service, social benefits, and business operation.

The cooperation between Vanke and Futian Welfare Center was a good model. But from another point of view, what problems did the government-run nursing homes have to make the elderly unwilling to stay? In addition to Futian Welfare Center, the seniors housed in the aging institutions run by local governments never reached their capacity and even decreased year by year (see table 5.12). The number of beds increased by 182.5% in 2017 compared with 2005, while the number of occupants increased only 44.6% and the occupancy rate halved. It was speculated that there were probably the

345 More information see http://gjdc.gz.gd.gov.cn/dcsj/201902/t20190215_154585.html (access on 5/6/2019). 346 According to the "Shenzhen Public Pension Institution Admission Assessment and Waiting Management Measures" promulgated by Shenzhen Civil Affairs Bureau and implemented from April 1, 2018, applicants for admission to public pension institutions must first satisfy the following conditions: 60 years old and above, Shenzhen household registration, no violent tendency and stable mental state, no infectious diseases, voluntary admission. Then, the application is sorted according to scores of age and ability assessment. The elderly get higher scores are eligible for admission first. The principle is to live in the district institution where the elderly’s household registration belongs, but applying across districts is also available. 202 following reasons: one was that Shenzhen people tended to rely on family pensions, and the elderly who were not really alone would not move to the nursing home; secondly, the threshold for application was set too high and it was only open for the elderly with Shenzhen household registration; the third was the obsolete facilities and low-quality service made seniors unwilling to stay. These speculations cannot be confirmed at present. However, the occupancy rate improved after Vanke’s takeover347, which meant that the demand existed, but without a satisfactory solution. The local governments should reflect on this problem.

Table 5.9: fee standard of Guangzhou Rongyue Binjiangzhong unit area bed nursing meal total amount type (m2) (yuan/m) (yuan/m) (yuan/m) (yuan/m) double room 54 3500 800 1800 6100 single room 47 5500 800 1800 8100 Source: https://www.anyang100.com/guangzhou/18059.html (access on 5/6/2019)

Photo 5.6: Rongyue-Binjiangzhong, Guangzhou

Source: Pictures of Zhuhang see http://gz.86office.com/rent/269056.htm (access on 18/6/2019). Pictures of Rongyue see http://www.vankeweekly.com/?p=85907 (access on 18/6/2019).

Photo 5.7: Futian Welfare Center

347 In August 2018, Futian Welfare Center reopened after Vanke's renovation. By May 2019, the number of elderly people living in policy beds increased from 88 to 105, and the occupancy number of commercial beds reached 85. The total occupancy rate increased from 27.5%, before the renovation, to 45.2%. The data were provided by Futian Welfare Center. 203

Source: Pictures from http://www.gzvankecare.com/index.aspx (access on 18/6/2019).

Table 5.10: fee standard of policy beds of Futian Welfare Center, Shenzhen meal bed nursing total amount type (yuan/m) (yuan/m) (yuan/m) (yuan/m) third-grade 620 2130 nursing second- grade 1100 2610 nursing first-grade 800 710 1650 3160 nursing (A) first-grade 2980 4490 nursing (B) super-grade 4180 5690 nursing Source: The data were provided by Futian Welfare Center.

Table 5.11: fee standard of commercial beds of Futian Welfare Center, Shenzhen (1): triple-rooms meal bed nursing total amount type (yuan/m) (yuan/m) (yuan/m) (yuan/m) third-grade 1500 5300~6200 nursing second-grade 1000 2800~3700 3000 6800~7700 nursing first-grade 4000 7800~8700 nursing (A)

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first-grade 5000 8800~9700 nursing (B) super-grade 6000 9800~10700 nursing specialized 8000 11800~12700 nursing

(2): double-rooms meal bed nursing total amount type (yuan/m) (yuan/m) (yuan/m) (yuan/m) third-grade 1500 8000~8100 nursing second-grade 3000 9500~9600 nursing first-grade 4000 10500~10600 nursing (A) 1000 5500~5600 first-grade 5000 11500~11600 nursing (B) super-grade 6000 12500~12600 nursing specialized 8000 14500~14600 nursing Source: The data were provided by Futian Welfare Center.

Table 5.12: basic statistics on social pension institutions in Shenzhen number number number of year-end occupancy year of units of beds population housed rate (%) 2005 26 2919 2340 80.16 2006 27 3419 2457 71.86 2007 27 2288 1316 57.52 2008 29 2797 1530 54.70 2009 30 3597 1760 48.93 2010 30 3597 1742 48.43 2011 30 4597 1869 40.66 2012 31 5194 2063 39.72 2013 31 4908 2554 52.04 2014 31 5996 2448 40.83 2015 31 6662 2745 41.20 2016 34 7116 3213 45.15 2017 35 8247 3384 41.03

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Source: Shenzhen Statistics Bureau, NBS Survey Office in Shenzhen, ed. Shenzhen Statistical Yearbook 2018. (Beijing: China Statistics Press, 2018), 401.

5.3.4 Taikang Model Founded in 1996, Taikang Insurance Company is currently one of the largest insurance and financial services institutions in China. In 2008, Taikang submitted to China Insurance Regulatory Commission (CIRC) the feasibility report and pilot application for the investment of life insurance funds in the pension community, which was approved on November 19, 2009. Its subsidiary, Taikang Community, was founded on March 18, 2010, responding to the construction and operation of pension communities. On June 16, 2013, Taikang’s first pension community, Yan Garden (燕园) was opened in Beijing, and in November 2015, its first rehabilitation hospital was completed in Yan Garden. Up to date, Taikang has laid out pension communities in 15 cities throughout the country. Apart from Yan Garden, Taikang has opened Shen Garden (申园) in Shanghai, Yue Garden (粤园) in Guangzhou and Shu Garden (蜀园) in Chengdu348(see photo 5.8).

Compared with Vanke's pension model, Taikang Community had five characteristics. First of all, the customer base was different. Based on its residential community products and customers, Vanke created three levels of aging services. Community- level institutions mainly serve community residents. Vanke's aging services were more popular. Taikang was based on its insurance products and customers, and its original intention was to repay its high-end customers. Purchase of two million Taikang annuity insurance obtained a qualification of guaranteed residence (policy-holder or insurant). An insurance policy related to the residence rights of the other five persons. The spouse of the policy-holder got preferential residence rights, that was, the spouse could stay in the same room without paying entrance fees and 50% discount on home expenses, and the parents of the policy-holder and spouse got priority residence rights. The age of resident was 60 years for men and 55 years for women. The second feature is a combination of medical care and aging care. While Vanke cooperated with other medical institutions, Taikang built its special rehabilitation hospital in each aging community, which was mainly responsible for rehabilitation and common and chronic diseases of the elderly. It also established a green channel with grade A hospitals in the city to ensure first aid and effective referral. On September 2, 2014, Taikang Community launched the "Global Medical Direct Train" service in Yan Garden to expand top international medical resources. It established a green international referral channel with Johns Hopkins Hospital, one of the top hospitals in the United States. The third feature was specialization and large scale. Vanke's pension business provided a wide range of services for different levels and needs, and in the form of many small institutions embedded in existing communities. Taikang communities were special communities which were especially location selected, designed, and built to provide housing and services only for the elderly. They served regional and urban customers on a relatively large scale. For example, Yan Garden had a building area of

348 http://www.taikangzhijia.com/licheng.html#2007 (access on 5/6/2019). 206

310,000 square meters and provided 3,000 residential units. Upon the investigation of many pension institutions in Europe, America and Japan at the beginning of its establishment, Taikang Community chose CCRC (Continuing Care Retirement Community) as its development mode, which was a particular type of retirement community. CCRC offered four zones with different levels of health care: independent living zone for active elders who did not need personal assistance; assisted living zone for people who required a little help with the activities of daily living; memory care zone for people who suffered from the Alzheimer’s disease; and an on-campus Health Care Center with skilled nursing and rehabilitation (for both short-term and long-term). CCRC fully covered older people’s requirements in health care. When their physical condition and self-care ability changed, they could get the corresponding living space and care service, staying in their familiar environment without moving to another community. Another distinguishing feature of specialization was special design adapted to the needs of the elderly. In every Taikang community, there were more than 60 design details and convenient facilities for the elderly, such as barrier-free design measures which helped to prevent seniors from falling and which were wheelchairs accessible, turning space for a wheelchair in all foyers and corridors, walk-in bathtub, and bed with defecation facility (see photo 5.9). These details made the daily life of the elderly safer and more convenient. The fourth characteristic was the form of residence. Vanke's Guangzhou Rongyue was a renovation of the old office building, and its rooms were similar to hotel rooms. Some rooms of Futian Welfare Center were a bit like a dormitory. Taikang Community was just like an ordinary residential community with different types of houses, single room, one bedroom, two bedrooms (see photo 5.9). All rooms could be decorated according to the resident’s preferences to create a home atmosphere. There were squares, green spaces, and walkways in the community, as well as public facilities to enrich the cultural and recreational life of the elderly, such as the senior university, social clubhouse, restaurant, library, and spiritual homes for different religions. Older people could develop their hobbies and interests in the community and build friendly neighborhood relationships. The last feature was the realization of migratory pensions. Customers could choose to stay in any Taikang communities as long as they obtained the residence qualification. With the large-scale national layout of Taikang Community, the main regions and cities would have Taikang's pension institutions. Older people could choose to live in different cities in different seasons, which was more conducive to the health of the elderly. They could also choose to live in different cities according to their descendants’ family locations so that they could get together with different relatives. In particular, active elders could live in different cities throughout the country for short or long periods to experience different urban cultures and environments.

In terms of cost, a huge amount of insurance was purchased only to obtain occupancy qualification. The residents needed to pay monthly expenses, including room fees and meals. Nursing fees were paid according to actual use. The fees for each community varied slightly according to the consumption level of different cities. Taking Yue Garden as an example (see table 5.13 and 5.14), the monthly fee for a self-care zone was

207

10,600 yuan in 2018, which was much higher than that of Rongyue. The residents of Taikang Community were its high-end insurance customers, so the beneficiaries were actually a small circle. According to the statistics of Yan Garden, 32.4% of the residents were senior retired cadres, 33.3% were senior intellectuals, and 24.3% were business owners or senior managers. Moreover, Taikang Community has sold more than 70,000 occupancy qualifications, thus, a new regulation was implemented from 1 April 2019, that those who bought two million in insurance were only guaranteed to move in before the age of 80, while only those who bought three million insurance were guaranteed to stay for their lifetime from reaching the prescribed age.

Photo 5.8: Taikang Community national layout

Source: official website of Taikang Community http://www.taikangzhijia.com/ (access on 19/6/2019)

Photo 5.9: Taikang Yue Garden, Guangzhou

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Source: photo taken in the field research on 20/1/2019.

Table 5.13: fee standard of self-care zone of Taikang Yue Garden unit one two entry fee per meal type area resident residents unit (yuan) (yuan/m/person) (m2) (yuan/m) (yuan/m)

one room 42 200,000 8,800 11,000

1 livingroom 64 200,000 13,400 15,600 1 bedroom 1,800 1 livingroom 78 200,000 16,800 19,000 1 bedroom 1 livingroom 117 200,000 26,700 28,900 2 bedroom Source: information collected in the field research in Yue Garden in 20/1/2019.

Table 5.14: fee standard of nursing-care zone of Taikang Yue Garden room (yuan/m) meal care deposit small double room large double room type single nursing (yuan/m grade (yuan/person) one two one two room /person) resident residents resident residents 1 5,600 assist in life 2 7,100

3 8,600 professional 200,000 8,600 10,300 12,500 13,600 15,800 1,800 care 4 10,600 memory 5 13,600 impairment Source: information collected in the field trip in Yue Garden in 20/1/2019.

5.3.5 Conclusion Although Shenzhen is not under pressure from pension at present, with the rapid increase in the number of aged people, this problem would become more and more serious. It is the government’s responsibility to provide pension security. On the one hand, Shenzhen government should reflect on the facilities and operation modes of the state-owned nursing homes, and make full use of public pension resources through self-rectification or learning from the state-owned private mode of Futian Welfare Center to meet multi-level pension needs. On the other hand, the government had to partly rely on social capital to invest in the pension industry to meet the diversified needs of the elderly.

As the representative of the insurance company, Taikang has formed a large-scale and specialized chain operation mode by bundling insurance with aging communities and

209 high-end medical services. However, Its model had great limitations-only serving high- end customers in the insurance business, it was difficult to extend to other strata at present. As a developer, Vanke tried a different way, that is to make full use of its developed communities in various cities to add aging services, as well as its experience in residential design and construction, and property service to establish urban-level aging institutions through old building renovation or cooperation with governments. Vanke has formed replicable aging products and service system. Its model made the aging care popularized, which could benefit most residents in the community.

For ordinary people with average income, Taikang model is only an ideal but unattainable way. According to the traditional and actual situation of China, for a long time, family pension is still the mainstream. The retired or about to retire people in Shenzhen have higher requirements for the housing, environment, facilities and professional care for aged peolpe, because most of them have financial preparation, rather than relying solely on their children. Thus, Vanke’s model is more conducive to the family pension that most Chinese people preferred at present.

As mentioned above, Vanke’s Zhihu Jia provided service of home space aging adaptation and transformation, which improved the elderly's ability to live independently, and the comfort and convenience of family pension. Upon this, rather than to carry out transformation after construction completion, it is better to involve the design for aged in housing spaces and public spaces and facilities of communities in the early stage of development, or at least to reserve the possibility of renovation for aged accommodation. Community planning should also reserve more flexible space for community pension service facilities. By adding the elements of aging adaption from the stage of housing development, a large number of residential areas can become elderly friendly communities, so that most residents have a certain quality of life when turning old.

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Chapter 6 Conclusion: Affordable and livable city

In the process of rapid urbanization in today’s China, people migrated to cities and tried to settle down in order to get more resources and enjoy a better life. Solving the basic needs for livelihood of housing, education, medical treatment, and pensions for a large population has always been a major issue in city life. Shenzhen has made a great achievement in housing development, with only 2,200 square kilometers of space accommodating nearly 20 million people. At the same time, the rise of this megacity has also caused many city problems, such as the dual development inside and outside the Second Line, the large-scale urban villages, the serious lack of space, the high price of housing to stop enterprises and talent, the insufficiency of public facilities, and so on. These issues concerning people's livelihood and retaining talent will be obstacles to the further development of Shenzhen.

The process of housing development in Shenzhen is a tripartite competing process among the government, developers, and buyers. In the framework constructed with planning theory and social science theory, the above chapters discuss the roles of the three groups and the competition and cooperation between them by enumerating detailed documents, data, design cases, interviews, and community survey analysis. It was the mutually reinforcing joint forces that pushed forward the housing development of Shenzhen in the last 40 years. The three groups had their own interests in different stages. Through competition and cooperation, the interests of the three groups reached a certain balance. With the development of the city, new demands emerged and the balance was broken, then new competitions started. All groups have to adjust their strategies and methods constantly. This tripartite competition and cooperation will continue to arise.

In China’s urban development, the government has always been the chief planner and player. Stability and growth are the goals of the government in governing the city. By maintaining urban stability, attracting talent and capital, and realizing the sustained growth of the city economy, the government officials can realize their political aspiration and personal promotion. By controlling land supply, formulating policies of land, housing finance, urban planning and approval, the government controlled the progress and direction of housing development at the dominant level. The role of government and the way of control were changing at different stages. The early days were in an unconventional stage when the government had to accommodate the requirements of enterprises on many issues because capital was needed for the original accumulation of the city. When the urban operation entered a normal orbit, the government was better at controlling it by state means. However, with the increasing degree of marketization, the drawbacks of administrative control became more and more obvious. The government had to turn to the role of guidance and supervision for continuing to use the demand for capital expansion and the power of enterprises to promote urban development. As for the general public, the government used administrative means to manage the flow of population and control their needs in the early stage. With the

211 gradual loosening of the Hukou (户口 household registration system), the deepening of the market economy, and the rise of self-consciousness, people could choose their places of work and life according to their wishes and conditions. The flow of population in and between cities became frequent. A certain settled population is a necessary condition for the stable development of the city. Therefore, the government needs to build public facilities, such as transportation, education, medical treatment, and old- age care, to provide convenience for citizens and improve their quality of life, which can attract talents to settle down. In recent years, housing measures and household registration policies that attracted talents have been introduced one after another in many cities, which was the proof of talent competition among cities.

In the new era of urban development, it is necessary for Shenzhen, which is congenitally insufficient in space, to seek a solution in the surrounding cities for the dispersion of industry and population. Within the city itself, urban regeneration and affordable housing are the new focuses of urban construction. All these problems of cooperation within or between cities must be solved at the government level first, so the role of the government becomes particularly important at this stage. Shenzhen government needs to build a good environment for investment and life through policy formulation, public facilities, and infrastructure construction to attract capital and talent inflows.

The second group is the developers. Although large enterprises, like Vanke, are increasingly emphasizing the social responsibility of corporate citizens and participating in various public welfare undertakings and construction of urban public facilities and affordable housing, the purpose of enterprises and capital is always to make profits. In order to survive and make more profits, they had to deal with government departments, even some officials and individuals. In order to gain a larger share of the market, they continued to research and innovate to meet the demands of consumers. With more critical insight into buying houses, consumers were demanding more on the quality and environment of housing and community. At the same time, developers had increasing difficulties and high costs of land acquisition. Therefore, real estate companies felt that “the era of rapid expansion of scale and making huge profits had come to an end.”349 In recent years, although the leading real estate enterprises still took real estate as the pillar industry, they have launched a diversified industrial layout to seek transformation. Wanda branched into cinema investment as early as 2003 and began to set up a cultural group to develop the tourism and sports industry. In 2014, Vanke announced that in the next ten years, it would still focus on residential development, but it was necessary to explore new business models. Vanke then began to engage in long-rent apartments, education, pension, and other industries. Evergrande Group (恒大), which was ranked the first among real estate enterprises with income exceeding 450 billion in 2018, mainly invested in cultural tourism, health industry, and high-tech industry in recent years. The Country Garden Group (碧桂园), which is in the top three of real estate companies, has achieved the layout of the whole

349 See Vanke Co., Ltd. Vanke Annual Report 2014. 212 industry chain. Its business involves building materials, design and construction in the upstream, and decoration, furniture and appliances, property management and hotel operation in the downstream. In recent years, it devoted itself to the development of industrial real estate by combining the agriculture and robotics industry.

The market force determines that enterprises invest resources in industries with stable returns and profit-seeking. If the government needs the contribution of enterprises in the construction of urban public facilities and affordable housing, it should offer attractive conditions. Otherwise, it is difficult to achieve a win-win situation in the game under the market economy. Although there are still many large-scale state-owned real estate enterprises in China, such as Poly Group, Zhonghai, China Merchants Group, Overseas Chinese Town, China Resources, etc., which can operate according to the government's will to a certain extent, these state-owned enterprises have already embarked on the road of market-oriented operation. China will certainly not return to the previous road of the planned economy. Dealing with the delicate and sensitive relationship between government and business is one of the key issues for the further development of cities.

The third group is buyers who flocked to cities for better job opportunities and living environment. Shenzhen is transforming from an immigrant city to a settled city. The living standard of Shenzhen people has greatly improved. A considerable number of them have accumulated certain wealth. With the rapid rise of the new middle class, people’s demands for living standards have become higher and higher. Everyone has different standards of satisfaction, but people have the same basic needs for housing, education, transportation, and so on. The purpose of consumers is to obtain good living conditions and occupy good public resources, for which they need to play games and compromise with the government and developers. Unlike the government and enterprises who work out short-term and long-term planning and formulate clear goals and strategies for development, the buyers’ competition is often fragmented and obscure. They only want to safeguard their own interests and achieve their personal goals. Therefore, ordinary people unconsciously express their wishes through their choices and actions in daily life to achieve some small goals. But in some special cases, because of some common interests and demands, people get together to express their appeal through group events, such as people's illegal construction in urban villages, resistance in demolition and relocation, disputes caused by school enrollment and school-housing, community rights defense by the residents, and so on. With the flourishing of the Internet, people’s wishes were expressed in various ways and spread timely and widely, which made ordinary people more inclined to use media publicity and public power to achieve their demands.

Affordability is the basic concern of the people, while livability is the basic condition for the people to be willing to take root in a city. The housing problem in Shenzhen, whether buying or renting, has become a highly sensitive social issue, which can easily attract the attention of the whole people. Moreover, the government's strategy was to

213 maintain social harmony and stability in recent years. People have been brave and good at expressing their demands through the Internet and we media. They could quickly make a wide impact, thus forcing developers to respond quickly. At the same time, they brought the government in and asked the government to supervise and help them play games with developers and landlords. The government and developers have to pay more and more attention to the voice of the people.

The convenient and rapid information dissemination was a double-edged sword. It enabled people to gain and disseminate information quickly and led to a certain effect on the government and developers. At the same time, negative information was also spread rapidly, giving some people with ulterior motives a channel to stir up the public sentiment to achieve their purpose. Every day on the Internet, there are farces with constantly reversing plots. Numerous onlookers irresponsibly express their opinions, making the Internet full of junk information, which is not conducive to the real appeal. The relevant institutions need to spend a lot of resources to verify the truth, and calm the public mood, which often delays the solution of the problem, or leads to the problem unsolved. Moreover, frequent reversals of truth and falsehood make the public's trust in the government and enterprises decrease, and the trust between people also decreases. Therefore, the public has the right to make their voices heard but also needs to treat the information responsibly and express themselves more rationally.

In the market economy, developers are the holders of resources and the suppliers of housing. Whether it is market operating and pricing or government intervening pricing, if the developers cannot make profits, they will stop losing and leave the market. As to consumers, if their competition is unsuccessful and they cannot afford to rent a house in Shenzhen, they will eventually choose to leave and find their affordable city. It is very difficult for the government itself to carry out the regeneration of urban villages. Meanwhile, the government needs to maintain social order. Therefore, the government has to find a balance point in the game, which can not only maintain the enthusiasm of developers’ investment but also provide an affordable and livable urban environment for the citizens. At the same time, both sides should be effectively monitored to maintain the tripartite game in a certain degree of balance.

Wang Jianlin350 once said: China’s economy was a government-led economy, and governments held the dominant power and the power of life and death. 351 This probably represented the views of most entrepreneurs on the government. The forty- year history has proved that the strong government has played an important role in policy formulation and implementation in China. It has taken China on the road of developing a market economy with socialist characteristics, greatly enhanced China's world status, and improved people's lives. The status of a strong government will exist in China for a long time. The key to China's long-term development lies in how the government effectively uses its might. The government is a crucial factor in the tripartite

350 Wang Jianlin is the founder and chairman of Wanda group. 351 Jianlin Wang. Wanda Philosophy. (Beijing: CITIC Press, 2015), 94. 214 game with enterprises and people. Its decision-making determines whether the game is carried out within a certain range and whether it can reach a certain degree of balance. Only when the three groups interact benignly to achieve a certain degree of benefit, respectively, the maintenance of this dynamic balance promotes the further development of Chinese cities.

A city is all about people as the city emerged for the gathering of people and prospered because of human innovation. 352 The competitiveness of the city is finally the competition for human talent. This thesis constructs a research framework which combines theories of planning and social science and conducts comprehensive urban research from the perspectives of space, policy, and people's daily life. The government, developers, and consumers are together put into a framework for research, which makes it different from the other research. Through the study of Shenzhen housing development, it points out the importance of urban housing development in attracting talent and retaining capital. It also points out that the tripartite game and the establishment of balance through cooperation and compromise in the game is the driving force of urban housing development. As the leading force of urban development in China, the Chinese government professed to represent the people’s interests, but not the interests of capital. The Central Government has realized that “the major contradiction in our society has been transformed into the contradiction between the people’s growing need for a better life and the uneven and inadequate development.”353 Only by safeguarding the interests of the people and building an affordable and livable city can the city attract talent and maintain social stability. This is the cornerstone of sustainable urban development in today’s China.

The GBA is a national-level urban development group, and also the ocean pearl in the T-shape strategic development structure in China (see diagram 6.1). It is also known as one of the four great bays of the world, together with the New York Bay Area, Tokyo Bay Area, and San Francisco Bay Area (see diagram 6.2). New York Bay Area is characterized by finance, San Francisco Bay Area is famous for its innovative technology because of Silicon Valley, and Tokyo Bay Area is an industrial complex bay area. In addition to their respective advantages, they also share the same characteristics: the gathering of universities and talents, the high proportion of service industry, and the perfect system of construction and co-ordination. The Tokyo Bay Area fully reflects the capability of the Japanese government in system planning, overall

352 Edward L. Glaeser. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. (New York: Penguin Press, 2011). 353 See Xi Jinping’s report in the opening meeting of the 19th National People’s Congress of the Chinese Communist Party in October 2017. http://cpc.people.com.cn/19th/GB/414745/414754/ (access on 4/9/2018). Including this report, the CCP has submitted three reports on major social contradictions. In the 8th NPC in 1956, it was first proposed that the main contradiction was “the contradiction between the people’s demands for the establishment of an advanced industrial country and the reality of a backward agricultural country”, then put forward that the main task was to vigorously develop the social productive forces. The second time was in the 6th Plenary Session of the 11th Central Committee of CCP in 1981. It was pointed out that the main contradiction was between the growing material and cultural needs of people and the backward social production. The focus of the work of the Party and the state must be shifted to the economic development and the construction of socialist modernization. 215 design, and implementation. The development of the New York Bay Area benefited from the perfect urban planning and implementation system of the Regional Plan Association (RPA), which was established in 1922. At the end of 2017, RPA issued the Fourth Regional Plan. This plan “seeks to address issues including housing affordability, overburdened transportation infrastructure, and vulnerability to climate change—by addressing the underlying shortcomings in the region’s governance structures.”354

Compared with the three well-known bays, although GBA has the largest area, the largest population, and the second-largest economy volume after New York Bay, there is much room for improvement in its hardware and software, including the number of colleges and universities, talent introduction and flow mechanism, system construction, regional development coordination and so on. All these aspects require the Central Government to play a key role in top-level design and coordination.

Diagram 6.1: T-shape strategic development structure in China and the area of Guangdong-Hong Kong-Macao Great Bay

Source: diagram is drawn based on “Opinions on Establishing a More Effective Regional Coordination Development Mechanism” issued by CCP Central Committee and State Council on 29/11/2018, and “Development Planning Outline of Guangdong-Hong Kong-Macao Great Bay” issued by CCP Central Committee and State Council on 18/2/2019.

Diagram 6.2: the four Great Bay Areas of the world

354 In 1922, some of New York’s most prominent business and professional leaders joined forces to launch an ambitious effort to survey, analyze and plan the future growth of the metropolitan region. This initiative was the first to recognize a New York metropolitan region– one that encompassed New Jersey and Connecticut. The results of this effort were the publication in 1929 of the landmark “Regional Plan of New York and Its Environs,” the first long-range, region-wide master plan for the New York metropolitan region, and the formation of the Regional Plan Association, an organization whose purpose at the time was to see that the plan was implemented. Details see https://www.rpa.org/regional-plans#fourth-plan (access on 25/9/2019). 216

Source: diagram is drawn based on google map.

The establishment of the GBA has brought great opportunities to the cities in and surrounding the bay area. As one of the core cities, Shenzhen gained development opportunities and great challenges at the same time. Hong Kong, which also belongs to the GBA, has a prominent advantage in the financial industry, shipping, and sound urban management and public service system. At the early stage of Shenzhen's development, Hong Kong had always been the model and development goal. Guangzhou is one of the earliest commercial ports in China and has always been the gateway city of South China. It is now the political and cultural center of the GBA, as well as one of the international transportation hubs and science and technology development centers. Shanghai, the central city of the Yangtze River Delta, has been the financial and economic center of China since its port opening. Beijing, the central city of Beijing-Tianjin-Hebei urban agglomeration, was the capital city of the Ming and Qing Dynasties and has always been the political and cultural center. All these cities were gradually formed in history, with a solid foundation and distinct historical imprints. These urban residents have obvious local characteristics in their daily life habits and social ties.

New York, which is also the core city of a bay area, experienced the decline of

217 downtown and suburbanization process in the 1950s and 1960s, and the central area revival in the 1980s and 1990s. Over the past three decades, the New York government has worked to restore the quality of life of its citizens in New York City. In 1993, 22% of people who left New York said that safety and school quality were the reasons for their departure, and in 2006, only 8% left for the same reasons. New York is now facing the situation that “a growing population, aging infrastructure, a changing climate, and an evolving economy posed challenges to our city’s success and quality of life,” and it recognized that “today’s mobility of people and capital has created a fierce competition among cities.”355 So they created PlaNYC as “a bold agenda to meet these challenges and build a greener, greater New York”356 to compete for the best ideas and the most capable and highly-trained workforce. This planning focused on functional and cost-effective infrastructure, quality of life, and sustainability. In housing and neighborhood, they put great efforts into creating and preserving affordable housing, creating capacity for new housing, and encouraging sustainable neighborhoods. Affordable housing continues to be a priority. At the moment, over half of the households spend more than 30% of their gross income on housing costs, and only 64% of apartments are affordable to a median income New Yorker.357 Thus, the city employs targeted programs to create new affordable housing. For the sustainability, mix-used neighborhoods are desirable, which are with a variety of employment opportunities, and local retail and services within walking distance of residences. Upon the applying of transit-oriented re-zonings, over 87% of new housing started since 2007 have been within a half-mile of transit.358

Compared with New York and other megacities of China, Shenzhen is special with its urban history only 40 years short. Even compared with the Asian megacity of Bangaluru (formally Bangalore before 2006), which also rose in the 1980s, the development process of the two cities was different, and the problems they faced were not exactly the same. Bangaluru has a longer urban history than Shenzhen. It was the capital city of Karnataka State since 1830. Because of its good environment and business foundation, Bangaluru was selected as the national industrial and high-tech development base after India became independent in 1947. It set up several national high-tech research centers, such as national defense research, scientific research, aviation laboratory, etc., and established several famous universities in India. A large number of skilled workers gathered in Bangaluru, which attracted high-quality enterprises and manufacturers. Infosys, a famous Indian company, was founded in 1981 and moved to Bangaluru in 1983 because several first-class engineering colleges provided the talent needed. With the benefits of the Asia Pacific market and the low cost of setting up factories in India, Bangaluru attracted the attention of international software and high-tech companies since the late 1980s. Texas Instruments began its

355 PlaNYC, A Greener and Greater New York. Update April 2011. City of New York, Mayor Michael R. Bloomberg. Details see http://www.nyc.gov/html/planyc/downloads/pdf/publications/planyc_2011_planyc_full_report.pdf (access on 25/9/2019) 356 Ibid. 357 Ibid. 358 Ibid. 218 outsourcing business in Bangaluru since 1987. International Business Machines Corporation (IBM) entered Bangaluru in 1991. The Indian government spared no effort to promote the development of Bangaluru. In 1991, the government built SoftNet for data transmission at high speed. In 1999, the Ministry of IT Industry was established, and IT ACT came into force in October 2000 to provide legal protection for the steady development of e-commerce in India. Bangaluru eventually developed into one of the world IT centers knowns as the “Silicon Valley of India”. The rapid development of the high-tech industry has exposed India's backward infrastructure, making Bangaluru adopt a special urban development strategy. Since the establishment of the Electronic Software Park in the 1980s, Bangaluru has built some modern Science and Technology Parks in the north and south of the old town. The Parks had perfect facilities and beautiful environment, attracting enterprises and talents from all over the world, which became a sharp contrast with the backwardness of the city outside the Parks.

Just like Shenzhen, Bangaluru’s development was mainly based on the government’s policies and benefited from foreign investment. Due to the private land ownership in India, the construction of infrastructure was very difficult, which led to isolated Science and Technology Parks in the outlying areas, forming a complete dual development of the city. On the contrary, China's land policy enabled Shenzhen to carry out large-scale construction of urban road, greening, and infrastructure. Although there are a large number of urban villages in Shenzhen, it has achieved a high level of the overall development. The backward environment outside the Parks has become the bottleneck of Bangaluru’s further development. Thus, the development of transportation and housing was the priority in the new urban master planning (RMP 2031). The government promoted the development of affordable housing by reducing GST, providing housing loan interest relief and subsidy, which attracted some famous developers, such as Salarpuria Sattva, to enter the development of affordable housing.

It can be seen that, on the one hand, Shenzhen faces similar problems in the land, housing, and public facilities as those megacities, no matter how historic or emerging they are. On the other hand, Shenzhen's urban development is beyond the norm and carries its characteristics. Every city's space and residents' daily living habits and needs are consistent with the city's temperament. Shenzhen’s characteristics are youth and innovation, pluralism and tolerance. Shenzhen has been recognized as “the hothouse of innovation” by the world and won the title of “silicon delta.” 359 The transformation and upgrading of Shenzhen's industry, the second housing reform, and the mechanism of encouraging entrepreneurship all embody Shenzhen's urban culture and spirit. Although Shenzhen has an open urban culture, the development of Shenzhen has expressed a strong will of the government since the establishment of SSEZ. The positioning of Shenzhen and the preferential policies were determined and offered by the Central Government, which was the main reason why Shenzhen could

359 Economist. April 6 2017. Detail see https://www.economist.com/special-report/2017/04/06/shenzhen- is-a-hothouse-of-innovation (access on 24/9/2019). 219 take off. Private enterprises account for most of the enterprises in Shenzhen, which makes Shenzhen’s enterprises more vigorous and innovative. Shenzhen people are more daring to express themselves because of their young and innovative temperament. Young people born after the 1990s no longer inherit the centuries-old tradition of Chinese people owning their houses. Their interest in buying houses has declined, but their pursuit of quality of life and education is on the rise. The characteristics of these three groups make the tripartite game in Shenzhen more frequent, direct, and dynamic.

In the T-shape strategic development structure, with Beijing as the core city, the Beijing-Tianjin-Hebei Urban Agglomeration occupies the north part. The Xiong’an New District (see diagram 6.3) was established to undertake the non-capital functions360and become the development engine of the urban agglomeration. Xiong'an is a national- level new district after SSEZ and Pudong New District. Forty years' development experiences and lessons of Shenzhen and Pudong make the planning and development of Xiong'an New District stand at a high starting point. Unlike Shenzhen, which pursued speed and quantity in the early days of economic reform, Xiong'an pursues quality development. After the establishment of Xiong'an New District was announced on April 1, 2017, all the land was strictly controlled by different level of governments, and no large-scale construction was carried out. It took 21 months to compile the urban master planning and other special planning. At the same time, it carried out the preliminary work of ecological coverage, environmental remediation, low-end industry liquidation and relocation, etc. to ensure that the new district was constructed under the planning. Development priority was given to transportation, public facilities, and affordable housing. While Shenzhen pioneered the first land reform and housing reform 40 years ago, Xiong’an is now the pilot of the new round of land and housing reform in China. It declared that it would not carry out large-scale land expropriation, and would not engage in land finance. Low housing prices would be its core competitiveness. Different from Shenzhen, which was a pilot of economic reform, without experience and capital support, and relying on the courage of leaders and the compromise for capital to obtain development opportunities, Xiong’an is a new development on the accumulation of 40 years urban development experiences, with China being the second-largest economy in the world. It is obviously fully dominated by the state. It may not make the same mistakes as Shenzhen, but in the process of urban development, the competition among the government, enterprises, and citizens will inevitably appear, maybe in different forms. Although the government is more empowered, it will still need to balance the tripartite game and make the three groups realize their own interests.

360 Non-capital functions refer to universities, research institutions, medical institutions, financial institutions, high-end service industry, high-tech industry, green agriculture, etc. details see Planning Outline of Xiong’an New District, Hebei Province. http://www.scio.gov.cn/tt/zdgz/document/1627988/1627988.htm (access on 16/10/2019).

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With the rise of megacities and the enhancement of collaborative development among cities in the urban agglomeration, cities should be studied in a regional framework. Thus, regional perspective is the base for the urban research of China’s contemporary cities. Although Xiong'an New District has a completely different starting point when comparing with SSEZ, the basic development path is still to provide residents with a high-quality living environment, perfect public facilities, and promising development opportunities. Therefore, the urban study needs in-depth research of ordinary people’s everyday life as it can truly grasp people's needs and hidden ideology for practical achievement. The method and focus of future urban history studies are to expand to the region extensively in spatial research, and to make a more comprehensive study deeply in people’s everyday life.

Diagram 6.3: Xiong’an New District in the Beijing-Tianjin-Hebei Urban Agglomeration

Source: diagram was drawn based on the Planning Outline of Xiong’an New District, Hebei Province.

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73. Wu Xiaobo (吴晓波). Thirty Years of China Business (激荡三十年：中国企业 1978-2008). Beijing: CITIC Press & Zhejiang People’s Publishing House, 2007.

74. Wang, Di. Going Into China’s Cities: History from the Bottom of Society (走进中国 城市内部：从社会的最底层看历史). Beijing: Tsinghua University Press, 2013.

75. Wang, Tongxin (王同信) & Zhai, Yujuan (翟玉娟), ed. Investigation Report on New Generation Peasant Workers in Shenzhen (深圳新生代农民工调查报告). Beijing: China Legal Press, 2013.

76. Wang, Shiwei (王世巍). Population Changes in Shenzhen, 1979-2010 (深圳市人 口变迁研究). Shenzhen: Haitian Press, 2014.

77. Wang, Dehua (汪德华). Urban Planning History of China (中国城市规划史). Nanjing: Southeast University Press, 2014.

78. Wang, Suiming (王穗明). An Oral History of Shenzhen 1980-1992 (深圳口述史). Shenzhen: Haitian Press, 2015.

79. Wang, Da Wei David. Urban Villages in the new China: Case of Shenzhen. New York: Palgrave Macmillan, 2016.

80. Wang Shi. The Vanke Way: Lessons on Driving Turbulent Change from a Global Real Estate Giant. United States: McGrace-Hill Education, 2017.

81. Xia Jun (夏骏), Yin Shan (阴山). Living Changed China (居住改变中国). Beijing: Tsinghua University Press, 2009.

82. Yang, Jisheng (杨继绳). The Era of Deng Xiaoping: a record of twenty years of reform and opening up in China (邓小平时代：中国改革开放二十年纪实). Beijing: Central compilation & Translation Press, 1998.

83. Zhou, Min and Logan, John R., Market Transition and the Commodification of Housing in Urban China: The New Chinese City: Globalization and Market Reform, edited by Logan, John R. (Great Britain: Blackwell, 2002), 137-152.

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究). Beijing: China University of Political Science and Law Press, 2013.

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Appendix 01: Questionnaire ( questionnaire distributed is in Chinese ) 调查问卷

A．个人信息 A1. 您的性别：1 男 2 女 A2. 您出生于哪一年？ A3. 您的婚姻情况 1 已婚 2 离异 3 丧偶 4 未婚 5 未婚，与恋爱对象同居 6 其他 A4. 您的受教育情况 1 小学及以下 2 初中 3 高中 4 专科 5 大学 6 研究生及以上 A5. 您曾从事的工作 （请由近及远列举） A6. 您是哪一年来深圳的？ A7. 您来深圳的方式？ A8. 您来深圳的目的？（可写多个理由） A9. 您计划一直在深圳居住吗？1 是 2 否 （可否说明计划离开的原因，例如想去别的地方 寻找机会、房价太高、回原籍养老等） A10. 你喜欢深圳什么方面？ （可写多个，从最喜欢写起） A11. 你最不喜欢深圳什么方面？ （可写多个，从最不喜欢写起）

B. 住房情况 B1. 目前与您居住在一起的有——人？他们是父母？配偶？子女？恋人？合租者？ B2. 您目前和曾经居住过的房子情况 （请从目前开始倒序填写，请包含时间、地点、产权、 房子类型、房间数、大约面积等信息） 时间段 住 宅 位 工 作 地 产权 住 宅 类 平 面 格 面积 是 否 有 置 点 型 局 小 区 环 境 例如：93- 罗湖 福田 合租 公寓 两 房 一 65 无 98 厅 一 厨 一卫

B3. 你在选择住房的时候，主要考虑哪些因素？（请从最主要的开始写，最多不超过 5 个） B4. 您通常在哪里得到房子信息？ B5. 请列举三个您最认可的开发商，为什么认可他们？ B6. 去看房的时候，售楼人员的介绍对你影响多大？100%，80%，50%，30%，0 B7. 去看房的时候，样板房对你的影响多大？ 100%，80%，50%，30%，0 B8. 您的小区有业主委员会吗？你认为业主委员会能帮助业主的诉求吗？ B9. 您认为房价的变动是什么造成的？（可写多个，请从最主要的开始写） B10. 您认为每个月房子还贷占家庭收入百分之多少是合理的？————% B11. 您对小区花园环境最看重哪些方面？ （可写多个，请从最主要的开始写） B12. 您认识邻居和小区里的人吗？1 认识很多 2 认识几个 3 基本不认识 是怎么认识 的？

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B13. 小区公共空间和设施中，您使用最多的是什么？ （可写多个，请最多列举三个） B14. 您认为您所居住的小区中最需要改进的地方是什么？ B15. 装修房子时您曾经对房子原有格局进行很大改动吗？比如改变厨房、卫生间位置、打 墙等，为什么需要改动？ B16. 在五年之内你有换房打算吗？如果有的话，是什么原因？

C. 出行与日常消费 C1. 您目前住在哪个区，上班在哪个区？ C2. 请问您每天上下班的交通方式。 C3. 请问您每天上下班花在路上的时间（单程） C4. 如果您是乘坐公交的，您需要转几趟车？ C5. 从您家到公交站或地铁站的距离大概多远？————米，如果走路需要——分钟？ C6. 您使用共享自行车吗？是在什么情况下使用的？ C7. 您觉得深圳的公共交通方便吗？ C8. 您觉得深圳的公共交通设施好吗？ C9. 目前，您每个月用于出行交通的钱占家庭收入的——%？您认为每个月用于交通的钱占 家庭收入——%是合理的？ C10. 与购物中心的距离是您选择住房的时候会考虑的重要因素吗？ C11. 您家谁负责买菜？日常买菜在超市还是市场？ C12. 您家是每天买菜还是几天或一周买一次菜？ C13. 您去购物是步行还是坐车？ C14. 您有进行网购吗？ 如果有网购，请问你在网购和去实体店购物的比例大概是多少。 C15. 您家每月用于食品消费占家庭收入——% C16. 您购物时多数采用何种支付方式？（例如：刷卡、现金、支付宝、微信支付等） C17. 休闲时间一般做什么？

D. 教育 D1. 您有孩子吗？（有的话）今年————岁？ D2. 幼儿园之前孩子是否上过（或打算上）亲子班或早教班等机构？ D3. 幼儿园期间是否上过（或打算上）课外培训课程？有哪些？ D4. 孩子上过（或打算上）哪些培训班或补习班 小学期间：——————————————————————————————————— — 初中期间：——————————————————————————————————— — 高中期间：——————————————————————————————————— — D5. 小孩是否参加过（或打算参加）假期培训或游学营？ D6. 小孩是否在国外留学？或是否有打算送小孩国外留学？原因是什么？ D7. 小孩是否上过午托班/晚托班？ D8. 您是否曾经/打算买（或租住）学区房？ D9. 您认为孩子的学校离家里多远合适？（例如：步行 XX 分钟，或坐车 XX 分钟） D10. 目前，您每个月用于孩子教育的钱占家庭收入的——%？您认为每个月用于小孩教育

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的钱占家庭收入——%是合理的？

E. 养老 E1. 您的父母（或配偶的父母）是否已经/即将退休？ E2. 父母计划（或已经）在深圳养老还是回家乡养老？ E3. 您父母的养老费用由谁承担？ E4. 您是否有计划过自己将来的养老？（例如：养老地点、财务安排等） E5. 您倾向于何种养老方式？（传统的家庭养老、社区养老、养老机构养老）为什么？ E6. 您是否有购买商业养老保险？ E7. 您所在的小区是否有养老方面的协助？有的话，请列举。 E8. 您所在社区的公共设施和空间中是否有为老人的专门设计？有的话，请列举 QUESTIONNAIRE (translation based on the Chinese version) A．Personal Information A1. Gender：1 male, 2 female A2. Year of birth: ______A3. Marital status: 1 married, 2 divorced, 3 widowed, 4 single, 5 live with a partner A4. Education 1 primary school, 2 junior middle school, 3 senior middle school, 4 diploma, 5 university, 6 master degree and above A5. Your Job: ______A6. When did you come to Shenzhen? ______A7. How did you come to Shenzhen? A8. What was your purpose to come to Shenzhen? (can have more than one reason) A9. Do you plan to stay in Shenzhen for long? If not, please indicate the reason. 1 yes, 2 no, because______A10. What do you like about Shenzhen? (can have more than one aspect, please start from the like best) A11. What do you dislike about Shenzhen? (can have more than one aspect, please start from the dislike best)

B. Housing Information B1. How many people live with you at present? Are they parents? Spouse? Children? Partner? Flatmate? B2. Information on your current and previous residences Time House workplace Property Type of Number area community frame location right house of rooms

B3. What factors do you consider when choosing a house? (can have more than one factor) B4. Where do you usually get house information? B5. Please list the top 3 developers in your mind. And why do you recognize them?

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B6. How much influence does the introduction of the salesperson have on you when you inspect the house? 100%，80%，50%，30%，0 B7. How much influence does the show room have on you when you inspect the house? 100%，80%，50%，30%，0 B8. Is there an Owner's Committee in your community? Do you think the Owner's Committee can help the owner's claim? B9. What do you think caused the increase of house price? B10. What percentage of household income do you think it is reasonable to repay the mortgage every month? B11. What aspects do you attach most importance to your community environment? (can have more than one aspect) B12. Do you know any people in your community? And how did you know them? 1 many, 2 several, 3 none B13. Which public spaces and facilities do you use the most frequently? (can have more than one space of facility) B14. What do you think need to be improved in your community? B15. Did you make a big change in the original layout when you decorated your house? For example, change the location of kitchen, toilet, wall, etc., why need to change? B16. Do you have a plan to move to another house in five years? If so, what is the reason?

C. Transportation and Daily Consumption C1. Which district do you live and which district do you work? C2. What is your commute mode? C3. How long is your single commute time? C4. If you use public transport for your commute, how many transfers do you need in your single commute? C5. How far is it from your house to a station? (space distance or time for walking) C6. Do you use a shared bicycle? Under what circumstances is it used? C7. How you think about the public transport in Shenzhen? C8. How you think about the facilities and services of public transport in Shenzhen? C9. What is the proportion of your monthly travel expenses to your family's income? How much do you think is reasonable? C10. Is the distance with a shopping mall an important factor in your choice of housing? C11. Who is in charge of daily shopping in your family? C12. How is the frequency of daily shopping in your family? C13. Your transportation mode for daily shopping. Walking? Public transport? Driving a car? C14. Do you do online shopping? What is the proportion of online shopping and shopping in physical stores? C15. What is the proportion of your family's monthly food consumption to household income? C16. What kind of payment do you usually use when you shop? Such as cash, card, Alipay, Wechat pay. C17. What do you usually do in your leisure time?

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D. Education D1. Do you have a child? If so, how old is your child? D2. Has your child attended (or planned to attend) parent-child classes or early childhood classes before kindergarten? D3. Has your child taken (or intended to take) extra-curricular training courses during kindergarten? And what kind of courses? D4. What training courses or remedial classes has your child attended (or intended to attend)? During primary school: During junior middle school: During senior middle school: D5. Has your child attended (or planned to attend) vacation training or vacation camps? D6. Has your child ever studied abroad? Or is studying abroad? Or plan to study abroad? D7. Have you sent your child to noon-care or evening-care? D8. Have you ever/intended to buy (or rent) a school housing? D9. How far do you think the distance between your child's school and home is appropriate? (can be expressed as the time spent to go to school by walking/on a bus) D10. What is the proportion of your child's education expenses to your family's income per month? How much do you think is reasonable?

E. Pension E1. Have your parents (or the parents of your spouse) retired? Or going to retire? E2. Have your parents got (or planned to get) aging care in Shenzhen or in the hometown? E3. Who will bear the pension expenses of your parents? E4. Have you planned your future pension? (location and financial arrangements, etc.) E5. Which pension mode do you prefer? And why? (traditional family pension, community pension, institution pension) E6. Did you buy commercial pension insurance? E7. Is there any assistance in aging care in your community? If yes, please list them. E8. Is there any special design of spaces and facilities for older people in your community? If yes, please list them.

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Appendix 02: Summary of interview finding: dormitory

time location type condition description and comments

One Two-story building, one Factory Dorm family bedroom one living Factory had satisfactory profit so the 1974 (Longgang one room, with kitchen and community is well maintained Sugar Factory) house bathroom

One Factory dorm Bamboo Shed, bunk Worst accommodation ever been in, felt family 1982 (rice noodle beds, and public toilet like refugee, storm ripped the whole one factory) and shower rooftop off twice room At the start we just put up with it, we all First two years lived in a did not know how long we would stay. steel sheet dorm, then I joined another company in 1984, moved to YuanLing 1982- they rented a whole building and Company dorm dorm in 1984, one 89 assigned every employee an individual person per room, got room, in 1989 in another company, I got assigned a 3 bedrooms a suite-house as family dorm, which I dorm in 1989 bought in the housing reform in 1992. multi-story dorm with SheKou Two outside corridor, the 40m2 per room, for cadre, two people Shuiwan C people most inside was a 1983 shared a room; for workers, the same zone single one balcony and bathroom, room housed 6-8 people. dorm room we made a stove for a mini kitchen A family of four living together was too One Luohu District 20m2 flat house, no crowded, but that was the condition back Family 1984 government toilet, made a wood- then, we were considered the better one dorm fired stove by myself ones, I knew a lot of people lived in room temporary sheds or even in the open air.

One newly built government family Finance family multi-story building, two dormitories, in comparison to the factory 1985 Bureau family one bedrooms one living dormitories before, conditions were dorm suite- room much better. house

Two The area was rural without shops multi-story building, people around, I drove to do shopping or change Company one bed one living- 1986 one a gas bottle. (Interviewee was a Dorm room, with kitchen and suite- driver). other people could only ride a bathroom house bike or use a wooden trolley

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SheKou Industrial Park built standard dormitories for factories in SheKou, normally six people a room, better multi-story outside- industries could reduce to 3-4 a room, Shekou Sihai Four corridor dorm, with after Sanyo moved, they still provided Apartment, people bathroom, hot water 1989 dormitories with better conditions, 40m2 Sanyo Factory one supplied on level one, for 3 people, equipped with fridge, hot Dorm room air con and hot water water, air conditioning and washing were added afterwards machine, they used to charge 50 yuan per person, now it is free, workers only need to pay electricity bills. multi-story outside- corridor dorm, with SheKou Industrial Park built standard Shekou Single bathroom and electric dormitories for factories in SheKou, 1990 Binlang Garden room stove, hot water on level normally six people a room, better one, only need to pay industries could reduce to 3-4 a room electricity bills multi-story outside- corridor dorm, the room the factory was far from the city, many Four Sanjiu was big and with facilities were built in the factory area, people 1990 Pharmaceutical bathroom. One room shops, canteens, tennis courts, game one Factory dorm housed max of four rooms, which satisfied all common living room people, some only two needs people. eight flat house, public All the factories had dorms, for eight people 1991 Factory dorm bathroom, also had a people or tens of people, all types of one canteen houses along with all the bad conditions room Simple bungalow, rural, Did not expect Shenzhen to be like this, PingHu Factory tens in 1992 could hear insects, very it was even worse than where I came Dorm a room poor conditions from, nearly couldn't make it four Bungalow, brick wall, tin people roof with asbestos tile, street office This was the housing treatment for 1992 one two people in a room, dorm single workers. suite- shared bathroom and house kitchen, no water heater Four Dormitory with inner Foreign people corridor, with bathroom The accommodation was acceptable as 1993 company dorm one and small balcony, no a new comer to Shenzhen room kitchen

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The company rented two five-story farmer's houses, for Longgang was full of factories, Two management and surrounded by farmer houses, and Longgang people engineers, three or four 1993 factories usually rented farmer's houses factory dorm one bedrooms and one as dorms. Workers were usually in room living room, two people dorms with worse conditions. in each room, shared living-room, kitchen, and bathroom The house layout was I had my kid and my parents with me. My One three bedrooms and family, five people lived in a room for half SAST Group family one living room. Three a year and it was too crowded, then the 1996 dorm one families shared the company assigned a dorm in Xiangmi room kitchen and bathroom, village and it came with two bedrooms which were very busy. one living room One Multi-story building, The house was nice, but the room was Huawei people 1997 three-bedroom, living not free, the rent was deducted from my company dorm per room and dining room salary room only cost me around 20 yuan in Outside-corridor Four accommodation per month. Those from dormitory, each room people companies without dorms could only rent 1997 SEG Apartment with kitchen, bathroom, one houses by themselves and it cost at least and balcony, maximum room hundreds, they could only afford farmer for four people houses anyway. I used to rent farmer houses around The company's One Caiwuwei for convenience to walk to property, three- people office, then it got broken into, I felt it not 1997 Qiaozhou bedroom suite-house, per safe then moved to company's dorm. It Garden one room for one room was still convenient as commuting bus person was provided. When I managed the engineering project, I At that time, the work shed was a large stayed in a work shed shared room supported by several steel with dozens of workers. Two pipes and enclosed by iron sheet. Tens When I was not with the people of people lived together, and washed 1997 Dorm project, I had a one with cold water even in winter. Now the dormitory in the room work shed conditions are good, which company, suite-house are movable board rooms with with three bedrooms bathroom. and one living room, two people in each room.

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suite-house with three Two bedrooms, living-room, Skilled workers lived in better dormitory, Beauty salon people 2001 dining room, kitchen and low-level handymen lived in much dorm one and bathroom, two worse conditions. room people per bedroom suite-house with two bedrooms and one It was very happy to have a dormitory in Two living room, the living- Shenzhen at first. At least I did not have Zhongdian people room was also divided to rent a village house like other people, 2003 Dorm one into a bedroom, so five and the dormitory was on the opposite room people in a house, side of the company office. It was very shared kitchen and convenient. bathroom it was the upstairs to the hospital canteen, suite- I haven’t thought that there was such a Two house with two poor dormitory in SSEZ. There were nly people bedrooms, kitchen and 2006 Hospital Dorm two beds in it, not even a table and a one bathroom. Two people cabinet. There were even mice, worse room in a bedroom and paid than a university dormitory. around 200 yuan per month per people the house was with four one In military quarters, ordinary soldiers bedrooms and one family lived in barracks with more than a dozen Military living room in an area of 2010 one people, and officers were assigned quarters dorm 110 square meters. And suite- suite-houses. The higher the rank, the the location was very house better the house. central in the city In 2014, as a Shenzhen registered Old house of the 1980s, resident, I began to queue up for outside corridor linked a government's low-rent housing. The Two dozen single rooms, government's low-rent housing was people 2011 Unit dorm with separated small definitely cheaper than renting a house one kitchen and bathroom, in the market, and the environment was room only need to pay much better than the urban village. there electricity cost700-800 yuan for a room in urban village, and 1200 yuan if with a balcony.

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Appendix 03: Summary of interview finding: rental housing

time location type condition description and comments

At that time, many Hong Kong people rented a farmer's house to set up a small Bungalow, no kitchen workshop-style factory. N dormitory was Shekou and bathroom, single provided. 4-5 workers usually rented one 1989 farmers conditions were worse room farmer's room with the monthly rent about house than that in my 150 yuan. sometimes the room housed 5- countryside 6 people. Everyone was unstable at work and could only afford such a condition. Monthly rent 220. The factory only provided single dormitory. Workers rented Three-story building with their house if married, the factory Shekou four single rooms on subsidized the renting fee. After two years, Nanshui single 1991 each floor, approximately I was in line with the double-employment Village room 16 square meters, public condition to apply for the transit-house of farmers' room kitchen and washroom the industrial park. the rent was 90 yuan in the beginning, and then it rose to 360 yuan later. The room was very bad quality, very cold in winter and hot in summer. When An illegal building built typhoon came, we had to run downstairs Luohu District with iron sheets above single to avoid, fearing that danger would occur. 1995 farmers the six-story farmer room The advantage was in the city center, house house. A public toilet on close to the workplace. The monthly rent each floor. was high as 800 yuan, and was exactly my basic monthly salary. After having a fixed income, I started to rent a house. I often moved at the beginning because of the rent and Multi-story building, first location, I rented this house for almost 20 suite-house with one years after I got married. Because the bedroom, living-room, suite- children needed to be steady to go to 1995 bathroom and kitchen, Luohu Buxin house school. Over ten years, the rent has risen then after married, from 1,000 to 3,000 yuan. When the changed to two house price was low, my income was not bedrooms suite-house stable, so I didn't apply for a loan to buy a house. I didn’t expect the house price to rise so fast, and I can’t afford it now.

Multi-story building, two Close to workplace, the environment was Lianhua Bei suite- 1996 bedrooms and one good, no children yet, so did not matter the community house living-room house was a bit small.

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Multi-story building, two My family just came for reunion and I Shangbumiao suite- 1996 bedrooms and one moved out the single dormitory and rented community house living-room a small suite-house as a starter home. I have been renting houses for 20 years and moved a dozen times. Some of my friends even moved several times a year. from single room to suite- I combine my home and my office in a suite- 1997 LuoHu house, from one bed suite-house now for convenience. I house room to three bedrooms. missed the best time to buy a house. I can’t afford it now. I bought a house in my hometown. When I am old, I will go back to my hometown. Monthly rent 1350 yuan, rented for more than ten years already, I regret not buying Shekou a house when even it was zero down Multi-story building, two WanXia suite- payment. I did not dare to buy mainly 1997 bedrooms, living-room, Farmers' house because I feel too insecure in Shenzhen, I kitchen and bathroom House was always afraid of losing my job one day. I bought a house in my hometown. It seemed to leave myself a way out. Old multi-story building, Monthly rent 1300 yuan, I was paid 1300- suite- two bedrooms, living- 1400 yuan per month at that time, meant 1998 Baishizhou house room, kitchen and my family paid a person's salary to rent a bathroom house, the pressure was very huge. I moved 9 times before buying a house in 2006. I once lived in Liantang, Dachong, Multi-story building, and Baishizhou. I started out renting suite- three bedrooms, living- sharing with friends. Later I met my wife 1999 LianTang house room, kitchen and and we rented a house. I started renting a bathroom one-bedroom house for about 700 yuan, and then rented two bedrooms, one living- room for 1500 yuan A shopping mall was separated into many monthly rent 450 yuan, and shared with Single single rooms about 20 my sister. the conditions were not good 2002 Dongmen room square meters for each, but the fee was affordable, and the public bathroom, no location was good. kitchen

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In 12 years, the rent rose from 750 to 1100 yuan, and the management fee was 100 yuan per month. In 2016, the building was a suite-house with two identified as a dangerous building. The bedrooms and one living government stipulated to demolish it, but room in a ten-story, Farmer's suite- the landlord concealed the government 2004 handshake building, house in house notice for a long time, and wanted the without an elevator, the Buxin tenant to live for as long as possible. The area was about forty government gave each household square meters relocation fee of 3000 yuan, but was embezzled by the landlord. We did not know where to report it. High-rise building, small duplex, 30 square Monthly rent 2200 yuan, although it was a Luohu Ocean suite- meters with one high rental fee, it was just on the street 2007 Building house bedroom and one living- opposite to my workplace and very room, very comfortable convenient small house urban village, 17 square affordable monthly rent 650 yuan, many suite- meters, one bedroom, young people often got together to eat up 2008 Qingshuihe house one living, kitchen, late at midnight, I liked the atmosphere of bathroom and balcony the village. monthly rent 6000 yuan, school-housing, the house is very small and very old, the Multi-story building, two surrounding environment is also very Yuanling suite- 2009 bedrooms, living-room, crowded, but the facilities are very community house kitchen and bathroom convenient, especially a lot of tutoring institutions. We will not stay here after the child goes to high school. The monthly rent was around 5000-6000 yuan five or six thousand. It was Luohu Ocean suite- High-rise building, two 2009 expensive probably its very convenient Building house bedrooms location. I rented because my father was sick and had to move to take care of him. urban village, one Monthly rent 1300 yuan, plus water and Sungang suite- bedroom, one living, electricity and property management, 2010 Village house kitchen, bathroom and around 1400-1500 per month, good balcony location, affordable

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monthly rent 6000 yuan, the child wanted to go to Shenzhen Middle School, but our school-house was for Shenzhen Experimental School, so we rented out our High-rise building, three house for the same price as we rented a Hezheng suite- 2015 bedrooms, living-room, school-house here, and there is an New Garden house dining room elevator to facilitate the elderly. The child will soon go to high school and will re- select the place of residence, where the environment is good, quiet, sunny, and close to the subway.

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Appendix 04: Summary of interview finding: small-profit housing

time location type condition description and comments

Multi-story building, it China Merchants Shekou Industrial Park was a good house at that encouraged its employees to buy a house Shekou time but it is old now. and we did. My dad was very advanced. Three 1987 Huaguoshan There is insufficient At that time, the house was only tens of bedrooms community parking lots. Now all thousand yuan. It is in the catchment of the street sides are full of Yucai Primary School and Middle School, cars so it is very valuable. I was assigned the house as a family Multi-story building, the dormitory in 1986, and I bought it in 1990. Luohu area is 107m2. I Three The building is just getting old and does 1990 government transformed it into a bedrooms not have an elevator. But the location is dormitory four-bedroom house in particularly good, daily life is very the second decoration. convenient. Several years later, the multi-story building was demolished and built as high-rise housing. I got the same area in Multi-story building, the the new one. But as the shared public area is 110m2. There areas were much bigger than the Three 1992 Gangxia were shops in the previous, the actual carpeted area was bedrooms Village village. Daily life was smaller. The floor layout was better that convenient there was an ensuite bedroom. It was very noisy near the road and there was no good school nearby. So, we moved to another house when we had a child. It was Shekou Industrial Park's welfare house, and it cost tens of thousands of yuan. Couples worked in the Park were qualified to buy. The school and hospitals Shekou Two Multi-story building, the built by the Park were perfect. Later, in the 1993 Rose bedrooms area is 76m2. cadre housing reform, I transferred to the Garden Cuizhu Garden and got a four-bedroom house with the area of 110m2, which was allocated according to the length of service and the position level. The house was only two bedrooms and smaller than my previous house. but it had good facilities surrounding the LianHua Two Multi-story building, 1995 community, especially good primary Village bedrooms small house school and junior middle school. We decided to live there for the child's education.

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Those couples who all worked in Shekou Industrial Park, could allpy for the small- profit house, which was scored according to the professional title, service period, cadre or worker position. 80 square meters, was the purchase standard. The excessive area needed to be paid in Taohua high-rise building with accordance with the commercial housing small 1999 Garden elevator, 90 square price. It was the first community that had three bed Phase I meters elevators in Shekou. So, the price and the property management cost were higher than those multi-story buildings. At the beginning, everyone did not accept it. Now I am getting older, I finally found elevator is very important. And the housing price increased faster than those without an elevator. The down payment was 110,000 yuan, that was all I got at that time. I could High-rise building, area choose a house with area of more than small of 80m2. good facilities 100m2, but it was not affordable for me. 1999 three Yitian Village and good middle school As a Shenzhen registered resident, bedrooms in the community people could apply for small-profit house, people would stay in the city only after they settled down. In 2000, I got married and was allocated a military family dormitory, four-story old 28-story high-rise building, two bedrooms and one building, welfare livingroom around 70m2. In 2003, It was housing for the troops. Army three demolished and rebuilt as high-rise 2002 The house area was residence bedrooms buildings. My level can only get a small- 97m2. there were good profit house around 80m2. So, I paid facilities in the some extra money to get one with area of surrounding areas. 97m2. I will not buy another house in ShenZhen as the price is not affordable.

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It is a very big small-profit community built by government. The community has very good public facilities, including kindergartens, primary school, junior high school, shopping mall, swimming pool, basketball court, tennis court, workstation, table tennis room. The three residents were mainly civil servants, who Sanhuan High-rise building, area 2008 bedroom all stayed for a long time. The Village of 89.7m2. 89.7m2 neighborhoods knew each other well so they felt secured. The property management fee (about 2 yuan per square meter) and parking fee (on ground 110 yuan per month, underground 250 yuan per month) are in accordance with the government guidance price and are cheaper than that of commercial housing.

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Appendix 05: Summary of interview finding: commercial housing

time location type condition description and comments

Multi-story building,

large community, 1996 Jinxiang City insufficient parking Quiet, suitable for retirement Garden space 6000 yuan per square meter, my company provided 250,000 interest- Futian free loans so I bought it, I did not move 1997 Greenview Multi-story building to there as we still lived in the factory Garden dorm as I got assigned a suite-house as dormitory in the factory zone after I got married. Large community, insufficient parking Yingshui three Multi-story building, the lots. Good location for rent out, so, we 1997 Shanzhuang bedrooms area 91.5m2 rented this out and rented a house near the kid's school The welfare housing, that was not allocated, was taken to the market by a related agent, and the price was High-rise building, large increased by 35,000 per house. In fact, small government welfare the small-profit house was around 1999 Yitian Village three housing community, the 4,000 yuan per square meters, which bedrooms supporting facilities was 800-1000 yuan lower than the price were well developed of near commercial housing. My purchase of my first home entirely determined by economic factor. For the convenience of my schooling small multi-story building, and my parents bought this house. I Liantang 1999 three with a good school in have lived in many districts in Pengxing bedrooms the community Shenzhen, and Luohu is the most lively and humane area.

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a super-large community, the external environment was not good, but the environment inside the community was very good, Vanke's design and management details were very good, and often organized activities, because of the child, I knew many neighbors, Vanke Three Vanke provided shuttle buses, but the 2000 Multi-story building Wonderland bedrooms school is not good. I didn’t have any experience in buying my first home. I just was attracted by the beautiful and decorated house in the Wonderland, and also the price was affordable. Now I will consider the location before buying a house, still I will consider Vanke's products. The advantage of being real estate agency is that I got many information. I was not stressful when buying a house. high-rise building. It was The houses I bought later were all for a house built by Meilin investment. I have always lived in the Street Office first house I bought, the surrounding cooperated with other facilities are mature, and the child 's Three 2000 XiaMeiLin developer. It was school is nearby. There are many bedrooms cheaper than the families that have lived here for a long commercial house in time. The neighborhood is particularly the market, only 3,000 nice, and like my family members. I feel yuan per square meter very secure. I will have difficulties to adapt to another community. Shenzhen’s neighborhood relationship was built by the elderly and children. I bought the house because I had a baby. I wanted my parents or hired a High-rise building, large babysitter to help me out. I just thought

Three house with convenient I need to buy a big house for housing 2002 Near the bedrooms living facilities, but there more people in my limited budget. The bonded area is no good school location didn't matter. I didn’t consider the school-housing issue. Thus, I had to move later for my child's education.

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Although I was a Shenzhen registered Multi-story building, residence and worked for a state- area of 42m2, very owned enterprise, but I was not eligible one convenient for a single to apply for a small-profit house as I was 2004 Nanyou Zone B bedroom life, good facilities single. So, I had to buy a commercia around, convenient house. I regret not buying a bigger one transportation as I did not expect the housing prices increased so fast. high-rise building. The house was old and It is a school-housing in the catchment small. The layout was of Shenzhen Experimental School. The learned from Hong child is going to enter high school and Kong's small-sized we do not need for a school-housing small Baihua housing. There are any more. We plan to change a house 2006 three Apartment many strange spaces in to improve the living environment. The bedrooms the house, but the location and environment will be surrounding facilities considered in the first place. But are good and Shenzhen is too crowded in transportation are very everywhere. convenient The child went abroad to study in high school. I still live here. I already got High-rise building, a used to living here Everything is very 2006 Yuanling school-housing for the convenient. The high-level view is good. child's education I don’t have to drive to work. An ideal home for me should be good location, good environment, and good neighbors. 6700 yuan per square. I originally wanted to buy a house in Nanshan. The price was only 8000 yuan per square 11-story low high-rise, meter at first. When I decided to buy it, the space between is it had already increased to 12,000 yuan, Longhua relatively large, so, the Three I had to buy outside the Second Line. 2006 Minzhi, Four view is good. It was an bedrooms When buying a house, I considered the Seasons old community with space between buildings, good views, Spring City poor property quiet community. I did not even management. consider the schooling for children as I did not have any sense about a school- housing.

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The previous homeowner bought it for around 700,000 a year ago, and I bought it for 1.4 million, after a few Multi-story building, Nantian Three months, the price rose to 1.8 million, 2007 area of 100m2, a Garden bedrooms and soon the house price fell to 1.2 school-housing million in 2008 because of the global economic crisis, but soon it did not fall, the school-housing is very resilient. total 900,000 yuan. it was close to my workplace and with good public facilities. The price was affordable. At that time, I did not have a baby, so, I did Luohu Binfen two high-rise building, area 2008 not consider about child's schooling at Shidai bedrooms of 70m2, relatively small all, I just thought about it a transit- house. Now I knew it was in the catchment of the Luoling Primary School. My first home. It cost around 10,000 per square meters, which was much more expensive than the price outside the Second Line. I bought it Just because of high-rise building. The the sea view. there were urban village Greenview small two area was small, and it surrounding and there was no good 2010 South Bay bedrooms was bought only for school. After I got married and had a Peninsula myself baby, I found that it was too small to live, let alone the bad surrounding environment and bad school. I began to worry about the issue of school- housing. The same money could only buy 90m2 in Shekou, and this house offered a lot of gift area. It turns out that Longhua developed very fast. My house is a very good purchase. at the time I bought it, the area was still immature. but now the area of 120m2, when facilities and school are very good. The LongHua three 2012 adding the gift area, it public transportation is also perfect, LaiMeng bedrooms reached 140-150m2. very close to the subway station, and one stop from the high-speed rail station. I think that the Shenzhen house prices will still rise. No more rising would prove that the city is not attractive any more. Now young people are not so keen on buying a house, they like

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renting house comfortably and conveniently. The house is quite off central, but the price was what I could afford. High-rise building, the Fortunately, it is still near the subway. It second last station of Three is good to rent out. It’s too far away to 2013 Near Longgang the subway bedrooms be convenient for my son going to Central City ShuangLong Line, school and I going to work. I rented a relatively rural area house close to my son’s school and my workplace. We chose Shekou because the house High-rise building, area layout is good, and fully decorated, of 208 m2, after filling using German imported kitchen and four the void part of the bathroom facilities. The actual usable 2015 ShuangXi bedrooms living-room, the actual area is large after filling the void. There area is 320m2, luxury are good schools around. And there are sea view residence many large companies, so the population quality of this area is high. After having a child, we only wanted to buy a big house. there is a subway High-rise building, area which is convenient. And the house was of 114m2, gift area of Henggang Three with full decoration. that everything fell 2015 30m2. decorated Xinyi Real bedrooms perfect in line. We enclosed the balcony house. near subway Estate to gain an extra 30 m2. We already own station. two houses, so we do not have a quota to buy the third house.

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Appendix 06: Letter of The Human Research Ethics Approval

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