Abstract
China experienced a series of institutional reforms in the mid-1990s, including in the areas of land, housing and fiscal policy, leading to a rapid urbanisation. To meet the high demand for urban land use, the farmlands of villages located in the vicinity of cities were expropriated first, due to relatively low compensation and transaction costs. The remaining land and building plots are surrounded by urban skyscrapers. Under the urban-rural land system, what we call the ‘urban village’ has emerged in China. Although urban villages offer low-cost housing for migrants, it is dangerous to conclude that this is an optimal way to house them, because urban villages also have negative externalities, including ambiguous property rights, deteriorating physical environments and social problems. To deal with these problems and allocate land more effectively, the government has launched large-scale urban village redevelopment projects (UVRPs) in recent years. The UVRPs are implemented with the characteristics of neo-liberalism and work in a similar way to the land readjustment technique.However, the government is often trapped in a dilemma situation during the redevelopment process. On the one hand, the government wants to expedite the redevelopment process, but on the other, forced evictions might harm the interests of householders, and projects are sometimes delayed by resistance, causing a fierce debate about social injustice. It is essential to find a way to balance project duration and conflict level. Hence, this study tries to answer the following four research questions: 1) Can different outcomes of UVRPs in terms of project durations and conflict levels, be explained from a transaction cost perspective? 2) If so, how do institutional arrangements affect project durations and conflict levels? 3) Which institutional arrangements for UVRPs are linked to short (or long) project durations and low (or high) levels of conflict? 4) What other factors also influence project durations and conflict levels and to what extent? These questions have seldom been explored, but they are crucial to finding a win-win solution to the urban redevelopment deadlock.
This study uses concepts from the theory of neo-institutional economics institutions, transaction costs and property rights to categorise institutional arrangements of UVRPs in terms of two dimensions: decision-making and funding source. Decision-making is classified as top-down and bottom-up; the funding source for construction fees of relocated high-rise buildings is classified as villager funding, government funding and private developer funding. When decision-making and funding source are combined together, institutional arrangements can be further categorised into four groups: top-down with government funding (TGF), top-down with villager funding (TVF), bottom-up with private developer funding (BPDF) and bottom-up with villager funding (BVF). The two dimensions of institutional arrangement demonstrate the power relationships between the main stakeholders and determine the structures and rules for implementation of a redevelopment project. In addition, this study defines a classification scheme for transaction costs at different stages of UVRPs and clarifies the relationship between transaction costs, social justice, and anticipated measurable outcomes.
After establishing the research framework, a mixed methods approach was used to answer the research questions. The quantitative method of multinomial ordered logit regression was combined with the qualitative method of multiple case studies. Four research hypotheses based on the transaction costs economics and behavioural economics were proposed. Statistical analysis of data on 439 UVRPs collected from seven Chinese cities revealed that hypothesis 1 was rejected, but hypotheses 2, 3 and 4 were supported. When other factors were held constant, projects implemented through top-down institutional arrangement were more likely to take a long time and involve a high level of conflict than those implemented through bottom-up institutional arrangements. This finding is in line with the neoliberal argument for devolution and decentralisation of government power. Under a top-down institutional arrangement, the costs of repeated negotiation and information requisition are high, which increases project duration. Although local governments can use the power of eminent domain to carry out forced evictions in the public interest, prospect theory suggests that villagers are more likely to adopt risky behaviours when facing the sure loss of their homes. However, devolution of state power does not mean no government interference. The statistical analysis also revealed that projects implemented via BPDF are more likely to incur high levels of conflict, which implies that the market sometimes cannot settle problems by itself. This finding also echoes the neoliberal view that the state should create and preserve an institutional framework, ensuring that the market can operate successfully. Projects implemented through TGF were more likely to be completed quickly than those implemented through TVF; projects implemented through BVF were more likely to be completed quickly than those implemented through BPDF. Other determinants, including City, initiating year (IY), number of households (Households), location section of relocated housing (LS), project attribute (PA), method of calculating temporary relocation fee (TRFM), temporary relocation fee (TRF) and method of calculating relocation area (RAM), influenced project duration and City, IY, LS, PA, TRFM, TRF, location of urban village (LUV) and RAM influenced the conflict level during the redevelopment process.
Comparative qualitative analysis of four case studies was used to identify the type and size of transaction costs at different stages of UVRPs and who bore them. Project duration varied with institutional arrangement. Institutional arrangement influenced transaction costs by structuring the power of stakeholders in order to facilitate property exchanges involving land and housing. Two cases in Yiwu demonstrate an incremental change in the institutional arrangement, providing evidence for North’s argument that institutional change is induced by alterations in relative prices and ideologies. Two cases in Ningbo suggest that even a relative efficient institutional arrangement can still result in holdout problems, because unmeasurable factors may be at work or due to ‘issue linkage’ that the policy makers ignored, which increased the size of transaction costs. In a given environment, bottom-up decision-making should be encouraged. This study provides a holistic understanding of UVRPs in contemporary China. In addition, the research findings could be used by local governments to improve policies to achieve positive outcomes for both governments and affected villagers.
| Date of Award | 30 Jan 2019 |
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| Original language | English |
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| Supervisor | Yung YAU (Supervisor) |