End of an era in China's urbanization & beginning of a new one

Large-scale demolition & construction halted by new rules

This newsletter introduces a recent Chinese government document that your Pekingnologist believes is underreported and of significance to people interested or with a stake in China’s breathtaking urbanization - now shifting gears.

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In the past several decades, one of the most common surprises for foreigners and Chinese citizens themselves, when they come back to a city after a few years, is they find the place completely unrecognizable - with its ever-changing skyline, it seems like every day a new building is erected in a Chinese city.

China’s extraordinary economic boom has gone hand-in-hand with urbanization, which has also reshaped both the physical environment and the cultural fabric in cities.

In 1950, barely over 10% of the Chinese population live in cities. According to the Seventh Population Census conducted in 2020, about 63.9 percent of the total population in China lived in cities.

With that urbanization rate, Wang Menghui, the Minister of Housing and Urban-Rural Development wrote in the People’s Daily newspaper in December 2020 that China

已经步入城镇化较快发展的中后期，城市发展进入城市更新的重要时期，由大规模增量建设转为存量提质改造和增量结构调整并重

has entered the intermediate and late stages of rapid urbanization, and urban development has entered an important period of urban renewal, shifting from large-scale incremental construction to equal emphasis in quality transformation of the stock and incremental structural adjustment

If your company or clients have made good money in the large-scale construction of houses and supporting infrastructure in Chinese cities, whether in building them, financing them or sourcing materials and equipment for them, this may be a generational change.

On August 30, 2021, the Ministry of Housing and Urban-Rural Development released the following document, which Pekingnology presents a full translation, followed by a vice minister’s Q&A on the document.

The document is very explicit on what shall NOT happen, which makes it quite easy to understand.

Please note this newsletter does not represent the view of anybody except your Pekingnologist - this should in no way be regarded as an official Chinese source.

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住房和城乡建设部关于在实施城市更新行动中防止大拆大建问题的通知

建科〔2021〕63号

Notice on Preventing Large-scale Demolition and Construction in Urban-Renewal  Projects

by the Ministry of Housing and Urban-Rural Development

The implementation of the urban renewal is an important decision and deployment made by the fifth plenary session of the 19th Central Committee of the Communist Party of China (CPC). It is a major project clearly defined in China’s 14th Five-Year Plan. Implementing urban renewal must comply with the laws of urban development, respect people’s will, change the way of urban development and construction to a path that emphasizes nuanced, green, and low-carbon development, adhere to the simultaneous implementation of “preservation, alteration, and demolition” focusing on preservation, utilization and improving, and strengthen repairs and renovations, make up for the shortcomings of the city, focus on improving functions, and enhance the vitality of the city.

Recently, various localities have actively promoted urban renewal projects. However, some places have shown a tendency to continue resorting to development and construction relying on excessive real estate projects, and a tendency of large-scale demolition and construction, and have shown the short-sighted pursuit of quick payoffs, which has led to the demolition of old buildings, relocation of residents, and cutting down old trees arbitrarily.

There is also a tendency of elevating housing prices in alternative forms and increasing the cost of living, which has created new urban problems. In order to proactively and prudently carry out urban renewal and prevent large-scale demolition and construction, the relevant requirements are hereby notified as follows:

Part I Insist on drawing a bottom line. Prevent deformation and distortion of urban renewal.

(1) Strictly control large-scale demolition. Existing buildings shall not be demolished on a large scale or in a centralized manner, except for illegal buildings and buildings that have been identified as dangerous by professional institutions and for which there is no value in repairing or retaining them.

In principle, within a certain urban renewal area or project, the demolished area shall not exceed 20% of the total construction area.

We advocate prudent dealing with existing buildings based on classification and implement small-scale, gradual, and organic renewal and micro-renovation. We advocate taking full advantage of the existing stock (of buildings), encourage the maintenance, repair, and reinforcement of existing buildings, improve facilities and equipment, and improve safety, applicability, and energy-saving levels. For buildings to be demolished, we shall strengthen evaluation and verification, solicit opinions publicly, and strictly implement approval procedures in accordance with relevant regulations.

(2) Strictly control large-scale expansion. Except for the addition of necessary public service facilities, the construction area of the old urban area shall not be expanded on a large scale, and the original density (of the old urban area) shall not be exceeded, and the pressure on the resources and environment shall not be increased. In principle, the ratio of demolition area and construction area within a certain urban renewal unit/project shall not exceed 2.

Under the premise of ensuring safety, it is allowed to appropriately increase the building area for the purpose of making additions to existing housing projects with imperfect living facilities, constructing affordable rental housing, and improving public service facilities and infrastructure. We encourage the exploration of the overall planning of the construction scale within a certain region, strengthen dispersing functions in over-dense areas, actively expand public spaces, parks, and green spaces, and improve the livability of cities.

(3) Strictly control large-scale relocation. There shall be no large-scale, compulsory relocation of residents, no changes to the social structure, and no severance of the relationship between people, land, and culture.

We shall respect the residents' willingness in resettling, encourage local and nearby resettlement, improve living conditions, maintain neighborhood relations and social structure, and the local and nearby resettlement rate of a certain urban renewal unit/project shall not be less than 50%. We shall practice the concept of creating a beautiful environment and a happy life together, simultaneously promote urban renewal and community governance, encourage house owners and users to participate in urban renewal to jointly build, govern and share a beautiful home.

(4) Ensure stable supply and demand in the housing rental market. There shall be no large-scale demolition of concentrated old urban buildings such as “villages within cities” （城中村）  in a short period of time, in order to prevent the imbalance of supply and demand in the rental housing market which increases the difficulty in renting for newly-arrived urban residents and residents with low income.

We shall pay attention to the steady implementation of the renovation of “villages within cities,” improve public services and infrastructure, improve the environment in public, eliminate potential safety hazards, simultaneously advance the construction of affordable rental housing, comprehensively solve rental housing problems for key groups such as newly-arrived urban residents, and people with low-income.

The annual increase of urban rental housing rent shall not exceed 5%.

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Note: It will be interesting to see if and how rent control will be implemented - in stark contrast to the capitalist, Western cities, China generally doesn’t have rent control.

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Part II Insist on preserving buildings that should be preserved. Fully preserve urban memories.

(1) Preserve and utilize existing buildings. We shall not arbitrarily move or demolish historical buildings and old buildings with protection value, and avoid leaving houses unattended and in disrepair, avoid repairing without using, and avoid leaving buildings unused for a long time.

For the areas where urban renewal is planned to be implemented, timely investigation and evaluation shall be carried out, the conditions of existing buildings shall be sorted out and measured, and the list of buildings that needs to be preserved and protected shall be clarified. Urban renewal shall not be implemented in areas where investigation and evaluation have not been carried out, where historical streets and districts have not been marked, and where historical buildings have not been identified. 

We encourage strengthening the renovation, repair, and utilization of existing buildings such as factory buildings, shopping malls, and office buildings without changing the nature of use and ownership of land and reducing the level of safety such as fire protection.

(2) Maintain the scale and layout of the old city. We shall not destroy the traditional layout and texture of streets and lanes in the old city. We shall not straighten and widen roads arbitrarily.

We shall not build large roads or large squares. We encourage precise work in repairing, mending, and renewing old factory areas, old commercial areas, and old residential areas. We shall strictly control the height of buildings, and preserve the distinctive layout and texture of the old city to the greatest extent.

(3) Sustain the characteristics of the city. We shall not destroy the topography. We shall not cut or move old trees or existing trees with local characteristics. We shall not dig mountains or fill lakes. We shall not arbitrarily change or invade rivers and lakes. We shall not arbitrarily rebuild parks with historical value. We shall not arbitrarily change the names of old places.

We shall put an end to the bad practice where grand, strange, and Western-style buildings are sought for. Plagiarism, imitation, and copycat of buildings are strictly prohibited. We shall adhere to a low-impact urban renewal construction model, maintain the natural landscape of the old city, and protect the historical relics such as ancient trees, ancient bridges, and ancient wells.

We encourage the use of local building materials and forms to build urban buildings that reflect regional characteristics, ethnic characteristics, and the style of the times. We shall strengthen urban ecological restoration, leave the urban land made available after demolition purposefully blank or turn it into green spaces rather than redeveloping, and retain the “genes” of the cities, such as unique regional environment, cultural characteristics, and architectural styles.

Part III Insist on doing work only within the capacity, prudently promote urban transformation and upgrades

(1) Strengthen overall planning. We shall not deviate from the local reality. We shall avoid treating only “symptoms” without digging deeper into causes. We shall eliminate the blind and irregular implementation of urban renewal. We shall strengthen work coordination, insist on the assessment before actual renewal, implement measures in accordance with local conditions and classifications, reasonably determine the key points of urban renewal, and delineate urban renewal units/projects.

Urban renewal plans shall be scientifically prepared and compatible with relevant plans. We shall establish a database for renewal projects, clarify the implementation schedule, do what is within our capacity, and put in persistent efforts. We shall explore planning, land, fiscal, and financial policies applicable to urban renewal, improve approval procedures and standards, broaden financing channels, effectively prevent local government debt risks, and resolutely curb new hidden debts.

We shall strictly implement the policies on renovating “rundown urban areas” （棚户区）, and urban renewal shall not be carried out in the name of the renovating rundown urban areas.

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According to a Xinhua report in May, China Development Bank alone:

截至“十三五”时期末，国开行累计发放棚户区改造贷款4.54万亿元，支持超过2300万户居民、约1亿人“出棚进楼”。

lent 4.5 trillion yuan in renovating “rundown urban areas” by the end of 2020, supporting 23 million households - about 100 million people - to leave shoddy homes and enter better buildings.

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(2) Explore a sustainable renewal model. We shall not follow the excessive real estate-oriented development and construction methods, and shall not unilaterally pursue the short-term, economic benefits brought by scaled expansion.

We encourage the promotion of a transition from "development" to "operating," explore a sustainable urban renewal model with government guidance, market operation, and public participation. The government focuses on coordinating various existing resources, increasing financial support, and attracting professional companies to participate in operating, to balance the investment in renovation with long-term operating income.

The existing resource owners and residents are encouraged to invest in micro-renovation. We support the integrated advancement of project planning, design, construction, and operation, and encourage the mixing of functions and compatibility of uses, advocate mixed land-use types, and adopt methods such as diversion, re-organizing, swapping, and leasing to develop new forms, new scenarios, and new functions.

(3) Speed up making up for functional shortcomings. We shall not do superficial work or engage in showcase or vanity projects that prop up appearances but are out of reality and waste money.

With the focus on making up for shortcomings, benefiting people’s livelihood, and on the urgent needs of residents, we encourage the vacated space to be used preferentially in the construction of public service facilities, municipal infrastructure, disaster prevention, and safety facilities, flood control and drainage facilities, public green spaces, and public venues to improve urban functions.

We encourage the construction of complete residential communities, improve community supporting facilities, expand community services such as shared offices, public classrooms, and public dining halls, create barrier-free environments for the disabled, and build communities that are friendly to all ages.

(4) Improve urban safety resilience. We shall not "emphasize what’s above ground yet overlook the underground." We shall not obsess with artificially decorating landscapes or excessively lighting up cities. We shall not increase urban safety risks.

We shall carry out thorough investigations of municipal infrastructure, investigate and rectify hidden safety hazards, and promote unified planning and coordinated construction of the renewal and transformation of ground facilities and underground municipal infrastructure. In urban greening and environment building, we encourage close-to-nature, localized, easy-to-maintain, and sustainable ecological construction methods, optimize vertical space and strengthen the construction of sponge cities integrating “blue”, “green” and “gray” infrastructure.

All localities shall continue to learn from their practices, adhere to bottom-line thinking, deepen and refine their respective urban renewal systems, mechanism, and policies based on actual conditions, actively explore and promote urban renewal, and effectively prevent large-scale demolition and construction.

We shall strengthen the guidance for the work of each city (county), supervise the re-evaluation of urban renewal projects that are under construction and those already approved but yet to be carried out, and thoroughly rectify the projects that involve overthrowing entire areas, or large-scale demolition and construction. We will supervise cities in a pilot program to further improve the urban renewal working plans.

The Ministry of Housing and Urban-Rural Development will regularly conduct research and provide guidance on the urban renewal work and pilot projects in all regions, study and coordinate to solve difficult problems in a timely manner, continuously improve relevant policies, and actively, prudently, and orderly promote the urban renewal projects.

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At an August 31 press conference hosted by the State Council Information Office, there is the following Q&A between a journalist and a vice minister in the ministry:

Q: At the beginning of August this year, the Ministry of Housing and Urban-Rural Development publicly solicited opinions on the draft Notice on preventing large-scale demolition and construction of buildings in urban-renewal, requiring strict control of large-scale demolition and construction, and insisting on advancing “preservation, alteration, and demolition” at the same time, so it has also been referred to the "ban on mass demolition." What standards and requirements does the draft put forward for urban renewal in the new era? thanks.

A: Thank you for your question. As we all know, after rapid urbanization development, our country's current urbanization rate has exceeded 60%, which means that we have entered the intermediate and late stages of urbanization. In the new stage of development, cities are facing many new problems and new situations. The fifth Plenary Session of the 19th Central Committee of the Party made important arrangements for urban renewal projects. This is also a new major work arrangement for urban development and construction in the new stage of development. It has a huge impact on improving the quality of urban development, continuously meeting people’s increasing demand for a better life, and promoting the sustainable and healthy development of the urban economy and society.

In launching urban-renewal projects, we understand that we must shift from the previous large-scale incremental construction to paying equal attention to quality improvement of the stock resources (existing buildings) and the adjustment of the incremental structure. It is an important methodology. We believe that the connotation of urban renewal is to promote the optimization of urban structure, the improvement of functions, and the improvement of quality, and it is also an important starting point for transforming urban development and construction methods.

The implementation of urban renewal projects has been incorporated into China’s 14th Five-Year Plan, and various localities have shown great enthusiasm. Many places have introduced urban renewal policies and mechanisms, and have planned many projects to promote urban renewal. But at the same time, some places have also shown signs contrary to the original intention. For example, they have started large-scale demolition of the old city and old areas, and in some places, old trees have been cut down on a large scale. In order to implement the decision and deployment of the Party’s Central Committee and prevent localities from returning to the path of the past of extensive urban development and construction, our Ministry drafted "Notice on Preventing Large-scale Demolition and Construction in Urban-Renewal  Projects" on the basis of research. This draft notice was recently published on media to solicit opinions from all walks of life and has received recognition and support from all quarters. The notice has been officially issued for implementation by our Ministry today.

The content is mainly as follows, and I will also answer your question with it.

First of all, we must draw an important bottom line for urban renewal.

Firstly, we need to control large-scale demolition. We think that in the old city, existing buildings, except illegal buildings and those that have been identified as dangerous by professional institutions, cannot be demolished on a large scale or in a concentrated manner. This is a requirement for demolition.

The second is to control large-scale expansion. The old urban area is already densely populated, so it is necessary to prevent aggravating the environmental pressure on urban traffic and municipal security.

The third is to respect the residents’ will. We do not carry out large-scale demolition where residents are resettled elsewhere en-masse. We support local and nearby resettlement and encourage property owners and users to participate in urban renewal, mainly to promote urban renewal through the model of jointly building, governing, and sharing a beautiful home. 

The fourth is to control the increase in rents. The large-scale demolition and construction in some places have brought difficulties to people when renting houses. Therefore, it is necessary to reduce the cost of renting houses for urban residents, especially low-income groups.

Second, we shall sustain the memory of the city. Existing buildings shall be preserved, transformed, and utilized as much as possible, and verified historical buildings and old buildings with conservation value shall not be removed or demolished arbitrarily. We encourage working in a precise manner in repairing, mending, and renovating, to maintain the layout and texture of old urban areas. We shall adhere to the low-impact renewal construction model, and sustain the historical context and characteristic style of the city.

Third, we shall prudently advance urban renewal. What’s important is to strengthen overall planning, prioritize urban evaluation and assessment, not increase local hidden debts, and explore a sustainable model of urban renewal with government guidance, market operation, and public participation. We mainly intend to promote the shift from "development" to "operating", attracting a broader spectrum of society to participate in the renewal.

We must not engage in showcase or vanity projects that prop up appearances but are out of reality and waste money. . Instead, we need projects that focus on making up for shortcomings and benefiting people’s livelihood. We need to coordinate the construction of the renewal and transformation of ground facilities and underground municipal infrastructure. to improve the safety and resilience of the city. Particularly, on the community level, it is also necessary to pay attention to complementing the shortcomings of facilities and services to build a complete residential community.

The work of urban renewal is just getting started and is still in the process of exploration. Next, we will push forward urban renewal pilot projects, explore methods and paths of urban renewal, launch a batch of demonstration projects, to carry out urban renewal projects in an active, proper, and orderly manner. Thanks.

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Translated by Zhixin Wan, copyedited by Alexander Wang, and reviewed by Zichen Wang. Don’t hesitate to reply should you have any questions, suggestions, or criticism.