A Transitional City: the Case Study of Shenzhen, China 1980-2005

1. International Conference on China’s Urban Land and Housing in the 21st Century, HKBU A Transitional City:the Case Study of Shenzhen, China1980-2005 Liou XIE 謝里歐 Supervisor: Prof. Victor F.S. Sit The University of Hong Kong December 2007

2. Contents • Introduction • Review of China’s Post-reform Development • Methodology and Data • Transitional Drivers and their Impacts on Shenzhen's Post-transition Development • Transformations of Land Use Pattern • Conclusion

3. I. Introduction Transitional City: Cities in countries that were formally under socialist ideology, but have then abolished state-Socialism or launched reforms to loosen the one party control and have started to rely more on market mechanisms.

4. I. Introduction Research Questions: • What are the key drivers of Shenzhen’s transitional development? What are their impacts on Shenzhen’s urban growth? • How has the urban economy of Shenzhen been growing in the transitional era? How has urban land use been expanding over the past twenty five years? • What are the characteristics of Shenzhen’s urban structure? What are the differences between this structure and that of cities in socialist China before the transition? • Are there any differences between Shenzhen and the contemporary transitional cities in Eastern Europe, as well as Western capitalist cities?

5. II. Review of China’s Post-reform Development • Decentralization of power • Stability of political environment • Reforms of land, housing and household registration system • Foreign Direct Investment: Global forces • Market mechanisms

6. Government Reforms Not Completed/Full Market Land Reforms Changes of Urban Economy Urban Land Use Structure Housing Reforms FDI Changes Urban Spatial Pattern Population Changes III. Methodology and Data

7. IV. Transitional Drivers and their Impacts • Institutional and Policy Innovations: • Start: a copy of the highly centralized and unified management model of the socialist administrative system of China since the 1950s • Seven rounds of government reforms: 1981-1982, 1983-1985, 1986-1987, 1988, 1991-1993, 2001 and 2003-2004. • key characteristics: • The first six rounds: streamlining government organizations and staff • renovations of government function and relationship between the government and enterprises • The seventh round in 2003: transformation from an administrative government to a service one

8. IV. Transitional Drivers and their Impacts • Policies and Changes of Land Market: • In 1988, Regulations of the Shenzhen Special Economic Zone on Land Management :from allocation by the government, without conditions and free of charge to paid usage of land. • In 2001, the Provisions on Land Trading Market of Shenzhen :a tangible land market is established and all transactions in land use right must take place publicly in the land market • Channels of land acquirement: • mutual agreement • invited competitive bidding • public auction • listing (started from 2004)

9. IV. Transitional Drivers and their Impacts • Areas of Allocated Land in Shenzhen, divided by allocation methods, 1994-2004

10. IV. Transitional Drivers and their Impacts • Policies and Changes in Housing: • Focus: to change the form of allocation of housing from a physical allocation system to a monetarilized system. • Key events: • In 1988, the Reform Scheme for housing in Shenzhen Special Economic Zone : to achieve commercialization of housing • In 1989, the Shenzhen Housing Trading Center was established • A system of Housing Provident Fund was also established in 1992 • In 1999, the Several Provisions on the Form of Housing System for Government and Public Institutions in Shenzhen

11. IV. Transitional Drivers and their Impacts • Generally, there are three types of houses now in Shenzhen: • Policy-oriented housing: affordable housing (经济适用房), comfortable housing (安居房) and low rent housing (廉租房). • Commodity-oriented housing: market commodity houses constructed by real estate developers and supplied for the whole society • Others: Self-constructed houses • The per capita gross living space in Shenzhen had improved from 6.6 m2 in 1980 to 18.3 m2 in 2005. • In 2005, the total construction floor area was 245.4 million m2: • 10%: capital construction, technical updates and transformation (including policy-oriented housing) • 25.5%: real estate developers • 64.5%: other ways (including rural collective units, villagers’ own houses and other self-funded construction) • The SEZ had made a big stride in its transition from plan to market in housing provision.

12. IV. Transitional Drivers and their Impacts • Policies and Changes of FDI • Forms and industries of investment • Favorable taxes • Use of land • Sales of products • Foreign exchange control • Other preferential policies

13. IV. Transitional Drivers and their Impacts Total FDI and Contribution of FDI to GDP in Shenzhen, 1980-2005

14. IV. Transitional Drivers and their Impacts Industrial Structure of FDI in Shenzhen, 1986-2005

15. IV. Transitional Drivers and their Impacts • Policies and Changes of Population • “Floating City”: in 2005, 78% of the total residents in Shenzhen were holding temporary residence cards. • Phases of population policy: • 1980-1986: phase of no control • 1987-2001: phase of planned control • 2002-present: phase of innovative reforms • Talents: mass and cheap labor high-tech talents  management personnel

16. IV. Transitional Drivers and their Impacts Distribution of Employment in Shenzhen by Sector, in selected years.

17. IV. Transitional Drivers and their Impacts Phase I Phase II Phase III • Phase I Preparation: 1980-1985 • Phase II Taking-off: 1986-1995 • Phase III Steady growth: 1996-2005

18. V. Transformations of Land Use Pattern • The settlements were small in size and laid out along the railway and main roads, concentrated in the Luohu area. • The total population was only 0.31 million, with a total GDP of 196.38 million RMB. • 139,500 of people were with employment, 68% of which were laborers of town and village.

19. V. Transformations of Land Use Pattern

20. Industrial Land Use:

21. Industrial Land Use:

22. Residential Land Use:

23. Residential Land Use:

24. Commercial Land Use:

25. Commercial Land Use:

26. Current Urban Structure of Shenzhen

27. VI. Conclusion • The decentralization of power has given the local government more decision-making authority and stimulated the growth of a proactive government keen on improving its development conditions and dealing with problems encountered. • The land reform brought a large amount of revenue for the local government which enabled them to improve the urban infrastructure for future and better development. At the same time, it activated the real estate industry. • The reform of household registration system allowed people to move from rural areas of China to the city of Shenzhen. While the reform of housing broke the connection of employers with their work-units and allowed them to move to wherever they like within the city.

28. VI. Conclusion • As the key impetus of Shenzhen’s post-reform development, FDI brought with it the world’s advanced technologies and management skills as well as new viewpoints and lifestyles. However, As the transitional urban economy of Shenzhen gradually matures, the significance of FDI and its contribution to GDP has also declined. • The rise of CBD in the city center. Office and service function is increasing in CBD. Production activities are decentralized to the outer ring, i.e. guanwai. • Sub-centers are formed in major transportation conjunctions, forming a multi-core system.

29. Contrasting Characteristics of the former Socialist City and Shenzhen, as a Transitional City of China

30. Contrasting Characteristics of the Western Capitalist City, the Transitional City in the EE and Shenzhen, as a Transitional City of China

31. Discussions • In this study, the characteristics of Shenzhen as a transitional Chinese city have been summarized. However, due to the time limitations and research scope, we have not the opportunity to further investigate social aspects of Shenzhen as a transitional city. • Comparisons of the transitional city of Shenzhen, Eastern Europe and the Western capitalist cities shed some light on the differences between these cities. The analysis is rather superficial due to the lack of availability of data in the literature and materials. However, this topic is of importance and requires further investigation in future. • Shenzhen may not be a typical example of the Chinese transitional cities. However, it serves as an individual case of the contemporary Chinese city. • This is a pioneering study on exploring the characteristics and distinctions of a specific transitional city in a rapidly-developing China. We have achieved our purposes as set out in the research plan. • In turn, it shows that similar case studies on other cities in transitional China are needed. Hopefully, with these additional efforts, we may arrive at a better understanding of the Chinese contemporary cities as a new type of city.