Social Groups andHousingDifferentiationin China’s Urban Villages: AnInstitutional Interpretation

SHENJING HE*, YUTING LIU**, FULONG WU† & CHRIS WEBSTER†

*Sun Yat-Sen University, Urban and Regional Planning, Guangzhou, China, **South China University of

Technology, School of Architecture, Guangzhou, China, †Cardiff University, City and Regional Planning,

Cardiff, UK

(Received March 2009; revised November 2009)

ABSTRACT Possessing different land rights and distinct landscapes, and separated from the rest ofthe city by invisible institutional boundaries, China’s urban villages are unusual enclaves forlandless farmers, rural migrants and other urban hukou (citizenship rights) holders in a period ofrapid urbanization. Although urban villages are well known for their disorder and unruliness, theyprovide temporary livelihood for indigenous villagers and inexpensive shelter for migrants and otherurban residents. Urban villages are typically perceived as homogeneous low-income neighbour-hoods characterized by low quality and high density housing. In fact, housing differentiation hasemerged in urban villages among residents who possess different quantities and types of capital,rights/entitlements, skills and other assets. This paper aims to understand the social groups and thehousing differentiation among them in the Chinese urban villages from an institutional perspective.It is based on a large-scale household survey in 11 urban villages in six Chinese cities. Empiricaldata show evidence of significant housing differentiation within these enclaves: indigenous villagershave become a petty rentier class; rural migrants pay the highest rents while enduring the lowesthousing conditions; and housing conditions for urban hukou holders lie between those of the othertwo groups. Regression analysis suggests that urban villages share similar dynamics of housingdifferentiation as wider urban spaces, i.e. the combination of strong institutional constraints andemerging market influences leads to housing differentiation and inequality. Residents in urbanvillages are also highly mobile. The inflows and outflows of population form an important part of theurban socio-spatial restructuring process.

KEY WORDS: Social groups, housing differentiation, China, urban villages, institution

Introduction

During China’s socialist period, housing was part of the social welfare package offered by

employers to their employees. Housing tenure and housing conditions were generally

homogeneous, despite the fact that housing inequality did, in fact, exist between people

ISSN 0267-3037 Print/1466-1810 Online/10/050671–21 q 2010 Taylor & Francis

DOI: 10.1080/02673037.2010.483585

Correspondence Address: Yuting Liu, South China University of Technology, School of Architecture, State Key

Laboratory of Subtropical Building Science, Guangzhou, 510641 China. Email: ytliu@scut.edu.cn

Housing Studies,Vol. 25, No. 5, 671–691, September 2010

from different hierarchical positions in the political system. In the post-reform era,

housing tenure security has been threatened in various ways by the commodification of

land and property. These insecurities have grown with the scarcity of land. As the state has

pursued rapid urban-centred economic growth, citizens’ housing security has been

endangered by various forms of urban (re)development activities and land expropriation,

as well as by invisible institutional barriers. In the waves of (re)urbanization, several social

groups are particularly vulnerable (Westendorff, 2007). Laid-off workers have become

vulnerable to housing poverty due to the collapse of state-owned-enterprises and lack of

capital; rural migrants cannot obtain secure and adequate urban housing due to multiple

disadvantages including lack of capital, institutional discrimination and unstable

employment; landless farmers suffer uncertainties about their rights to dwell and derive

income from former village land due to incomplete and insecure property rights over semi-

legal housing they have built on that land (He et al., 2009; Tian, 2008); and those low

income urban residents who live in public rental housing owned and managed by local

housing authorities are threatened by urban redevelopment of the old urban

neighbourhoods in which they live.

Adding to the problem of housing tenure security is the emergence of socio-spatial

differentiation, particularly housing inequality. Studies of China’s housing markets and

residential areas suggest that visible socio-spatial differentiation and housing inequality

have started to emerge in a big way in large cities such as Beijing, Shanghai and Shenzhen,

as a result of growing diversity in all aspects of housing provision and consumption

following economic reforms (e.g. Gu et al., 2005; Li & Wu, 2006, 2008; Lu & Cai, 2006;

Xu, 2007). One important step in China’s wave of housing reforms happened in the late

1990s with the launch of the housing monetarization policy and the housing provident

fund system. Since then, urban homeownership has increased dramatically; urban housing

conditions have improved; and certain historical housing inequalities associated with

the work unit housing provision system have been slightly ameliorated. However, the

country’s housing reforms have not primarily been aimed at eradicating housing

inequalities. They have in fact led to wider housing consumption gaps, greater social

polarization and an embedded pattern of spatial segregation (Lee & Zhu, 2006; Lee, 2000;

Yu, 2006).

Among the driving process, the privatization of public-owned housing and the wave of

rural-urban migration have together imposed a profound influence on housing inequality

and housing poverty (Sato, 2006). Research on migrant housing demonstrates a large

disparity in housing conditions between urban and migrant households, and highlights a

new type of emergent housing poverty (Sato, 2006; Wu W. P., 2002, 2004, 2008). More

generally, socio-spatial differentiation in the Chinese city is the result of the confluence of

historical legacies of inequalities that existed prior to the socialist city; the inequalities

forged under socialism; the fragmentation of public housing provision system; the new

urban development market; globalization and economic restructuring; and rural-urban

migration (Chen & Sun, 2007; Wu F. L., 2002, 2005). Studies from different perspectives

point to a general finding: socio-spatial inequalities rooted in the centrally planned

economy remain and are even strengthened by the institutional changes post-reform, while

market forces have yet to show much influence in redressing these inequalities (Huang,

2003; Li & Huang, 2006; Li & Siu, 2001; Logan et al., 1999; Zhou & Logan, 1996).

The emergence of urban villages is a manifestation of socio-spatial differentiation

unique to China. Being one of the three main types of poor urban neighbourhood

672 S. He et al.

(Liu & Wu, 2006), urban villages provide temporary shelter for several marginal groups

central to the rapid urban-centred wealth accumulation process. Specifically, these groups

include landless farmers whose farmland was forcibly expropriated by the city

government; rural migrants who provide cheap labour to the city while suffering from

institutional discrimination; and employees of small street-run state-owned enterprises

(SOEs) or collective-owned enterprises (COEs). The latter were a marginal group both in

the earlier industrialization period and the post-SOEs/COEs reform period.

Having identified these three groups as being particularly vulnerable to urban poverty,

including housing poverty, their socio-economic and housing conditions are not

homogenous within urban villages. In fact, these three groups display quite different

patterns of access to socio-economic endowments and resources, and their social status

and housing conditions vary substantially as a result. Within urban villages, institutional

ambiguity and informality under market transition have provided these marginal groups

the spaces to live and opportunities to make a living. This paper, therefore, deals with an

important research question: how these groups make use of their own endowments and

resources to develop their own survival strategies, and to create a complex mosaic of social

and physical spaces. As the products of hasty urban expansion and problematic

institutional arrangements (He et al., 2009), urban villages have become both a safety

valve for urban-led economic growth (as the only source of informal-sector low income

housing in the Chinese city), and a source of emergent social problems. They therefore

provide an intriguing case for studying social stratification and housing differentiation at

the neighbourhood scale in urban China.

This paper aims to better understand the dynamics and characteristics of social and

housing stratification in urban villages using institutional reasoning and empirical data

analysis. Specifically, this research analyses the institutional settings and changes which

contribute to social and housing stratification in urban villages, presents empirical

evidence of housing stratification, and examines the factors contributing to housing

stratification using empirical data. The remainder of the paper is organized as follows: the

next section analyses the institutions underlying the formation of urban villages; the

following section scrutinizes the social structures within urban villages; the next section is

an empirical study based on data from a large-scale household survey; and the final section

concludes.

The Institutions Underlying the Formation of Urban Villages

Urban villages are the unusual products of rapid urbanization through land expropriation.

When urban expansion encroaches into rural land, the city government needs to acquire

land rights from the rural collective to convert rural land into urban land. In many cases,

to avoid the costly compensation to relocate villagers, the city government only

expropriates the farmland of the village, and the housing land remains in the hands of the

collective. Over time, the village settlement is surrounded by urban built-up area, creating

the so-called urban village. Some scholars prefer the term ‘urbanized villages’ or ‘villages

in the city’, or the Chinese term ‘chengzhongcun’, in order to avoid the confusion with the

Western planning concept ‘urban village’. Indeed, urban villages in China and urban

villages in the Western planning concept differ in many ways. However, when the

two concepts are scrutinized, some similarities can be found. An urban village in the

West refers to an urban form typically characterized by medium density development,

Social Groups and Housing Differentiation in China’s Urban Villages 673

mixed-use zoning, the provision of good public transit, an emphasis on urban design,

particularly pedestrianization and public space. The idea is to reduce car reliance and to

promote cycling, walking and transit use, to provide a high level of self-containment

(people working, recreating and living in the same area), to help facilitate strong

community institutions and interaction (Aldous, 2003; Gratz, 2001). In a sense, urban

villages in China have some of these characteristics, possibly more so than some so-called

urban villages in the West. These include pedestrianization, accessibility, self-containment,

mixed land use and a high degree of intra-neighbourhood interaction. They also have a

quality that urban village designers in the West would dearly like to see in their creations:

spontaneity, surprise and informality. These latter qualities are a result of their unplanned

development and come at a cost of very poor physical environment, including poor

quality housing.

The notion of the urban village in China has been clearly defined in other scholars’

works (Tian 2008; Zhang et al., 2003). This does not need to be reiterated, but the

institutional context that gives birth to this unusual type of urban settlement should be

emphasized. The formation of urban villages is related to particular institutional

conditions. This study mainly focuses on the institutions of (1) land; (2) hukou; (3) housing

provision; (4) village governance, and how these institutions resulted in social and housing

stratification, and contests between different groups. As will be elaborated in the following

sections, the unique institutional settings in urban villages make them distinct from the rest

of the city, not only in terms of physical appearance, but also in terms of the stratified and

fragmented social structure, which resulted in housing differentiation and a different form

of governance.

The Institution of Land: Dual Land System

First, it is the result of the redistribution of property rights under the dual land system.

The village collective is the legal owner of rural land, while the city government is the

legal owner of urban land. By law, collective land has to be transformed into urban land

through land expropriation before it can be circulated in the land market. This rule is

currently under intense scrutiny and subject to review.1 For now, however, it is still a

fundamental foundation of Chinese land law and no national policy yet exists that allows

village collectives to directly engage in land conveyance without first converting their

rural land to urban land (tudi liuzhuan in Chinese). The practice of rural land conveyance

directly from the collective to firms for the purpose of housing development is still

prohibited. However, the practice of transferring land use rights from the collective

directly to an enterprise is not uncommon. Allowing direct rural land conveyance

is considered to be the ‘fourth land revolution’ in China. But the adaptation of this

law is still at an early stage and national policy has not yet been published to regulate

the practices. What type of change it would bring to China’s land development is

still uncertain.

During the last two decades, city governments have made huge fortunes by capturing

the price difference between rural and urbanized land. The cost of land to governments

is determined by administrative rules relating to compensation. However, the price is

determined by the leasehold market. It is local governments who pocket the difference.

Until very recently, villagers had not been thought of as having any rights to the profits

generated by the urbanization of rural land (He et al., 2009).

674 S. He et al.

Compared to the landless farmers who have lost both their farmland and housing land,

farmers in urban villages are fortunate. Since the housing land remains in the hands of the

collective, every indigenous village household is entitled to unlimited use rights of their

housing land under the framework of collective ownership (Zhang et al., 2003). After

losing their major source of livelihood and typically remaining outside the mainstream

urban labour market (because of an absence of urban labour skills), villagers develop a

survival strategy through building houses on their land and starting small rental

businesses. In well-located villages in the coastal cities, the village collectives sometimes

also rent out consolidated land to industrial enterprises, but this requires a higher degree of

organization, access to capital and negotiating skills. Most villagers enter the residential

development and rental market, which has proved to be surprisingly easy for these

ex-agriculturalists. In many cases, the village collectives also establish stock

share-holding companies to manage their rental businesses. Indigenous villagers are

entitled to share the dividend of the collective economy.

In cases where farmers have lost both their farmland and housing land through land

expropriation, the dual land system results in a catastrophic decline in villagers’

entitlement and pushes them into the trap of impoverishment. However, in urban villages,

farmers have turned the dual land system into an advantage. From the collectively owned

land left after farmland expropriation, they generate considerable earnings from renting to

rural migrants.

The Institution of hukou and Housing Provision: Migrant Worker Housing Scarcity

Second, the formation and densification of urban villages is directly attributable to the

absence of other viable housing provision for migrants. Until the recent slight drop in

economic growth rate and the reported return-migration, there were more than 200 million

rural migrants in China’s towns and cities. Housing deficiency is the biggest issue for

migrants. They do not have any access to public housing and they cannot generally afford

the housing in the formal rental market. Studies by W. P. Wu (2002, 2004, 2008) and Shen

(2002) show that urban villages have provided extensive and inexpensive shelter for rural

migrants. Zhang et al. (2003) suggest that urban villages provide a source of self-help

housing for rural migrants and other low-income residents. In a sense, urban villages have

absorbed part of the potential social instability caused by rapid urbanization and the city’s

immense demand for cheap labour from the countryside.

The enormous demand for affordable urban village housing by rural migrants results

from institutional deficiency and discrimination. This makes possible the widespread

rent-seeking behaviour practised by indigenous villagers and the formation of a highly

responsive and sometimes lucrative informal housing market within urban villages. This is

driven by market forces (demand from rural migrants, supply by villagers) but is

fundamentally rooted in market transition, in which institutional deficiency is a deliberate

design to feed the rapid urban-based economic growth with cheap labour. Affordable

housing for rural migrants supplied by urban villages has become one of the important

elements of China’s urban growth. If urban villages were not there, something would have

to replace them. Given the state’s strong control over land in China, this would inevitably

mean subsidized low-cost housing and higher cost urban growth. The state, therefore,

tolerates the emergence and development of urban villages to maintain the low-cost

growth pattern.

Social Groups and Housing Differentiation in China’s Urban Villages 675

The Institution of Village Governance: Vacuum of State Regulation

Third, there is a vacuum of state regulations in urban villages. Since villager-controlled

collective land is not considered an official part of the city, the formal urban institutions,

such as infrastructure provision, social welfare provision and urban planning are not

applicable in the villages. In the view of city government, the villages are illegal

constructions rather than an integrated part of the city. They are considered an urban

pathology that is incompatible to the modern city image. This sets up a paradox that is not

easily accommodated in political and professional narratives and policy: urban villages are

pathological and need to be redeveloped to achieve healthy and efficient modern cities but

they are needed to house rural migrants. Fundamentally, the dichotomy of urban and

collective land ownership results in a deep division between urban villages and the rest of

the city. Where villagers retain their rural hukou, the division between urban villages and

other parts of the city is even deeper. Although in many cities urban village committees

have been converted into ‘residents’ committees’, the membership of these committees

often remains unchanged. The name change does not really alter the way the villages are

managed and governed. Village society remains, although physically it has become part of

the city. The village economy also continues, often in the form of economic union ( jingji

lianshe in Chinese) or share-holding companies engaging in land and housing rental

businesses (Tian, 2008). Even in the cases when the city government has assigned new

members to the newly formed ‘residents’ committee’, the economic union or the share-

holding company still remains the major governing agent in the village.

To a large extent, urban villages are disassociated from formal urban institutions and

have emerged as self-organized micro-territories, managed by village collectives and by

individual villagers themselves. However, this is not a stable state of affairs. Further waves

of land expropriation and urban redevelopment can result in the dissolution of an urban

village. Many city governments have shown a high degree of tolerance so far, partly

because of the high cost of compensation and partly, no doubt, because of a degree of

acceptance that villages are needed to house a city’s low cost migrant labour. This

temporary tolerance has given rise to the excessive construction of high density low

quality housing and the thriving informal housing market inside urban villages.

These unusual institutional conditions set the scene for the contesting of space within

and surrounding urban villages. Conflict, negotiation and compromise characterize the

relationships between the different interest groups that include the city government,

neighbouring urban areas, village collectives, individual villagers, rural migrants, other

urban hukou holders renting from villagers. These interests are constantly competing for

space, including space for housing and space for livelihood. Within urban villages, the

ambiguous land rights put indigenous villagers in an advantageous position to negotiate

with the other interest groups. As a result, the vast majority of indigenous villagers have

become a small rentier class extracting high margins from their rental businesses.

With regard to conflict and negotiation between villages and other parts of the city,

village collectives needs to actively confront the city government and nearby urban

neighbourhoods in order to protect their properties from demolition and redevelopment or

from neighbouring redevelopment that would affect their livelihood. If the municipal

governments of China tend to behave like revenue maximizing firms, making money out

of land conversion, then urban villages act like mini-firms seeking to protect their own

landed interests from the predatory governments whose jurisdiction surrounds them.

676 S. He et al.

Although temporarily remaining as the legal landowner, the village collective is not

always the winner in these conflicts. The city government can very quickly take away the

collective’s land rights through another round of land expropriation. The tolerance that has

been noted means that there are many urban villages existing and emerging in most

Chinese cities, especially large cities. In some cities, however, policy has been enacted

that effectively serves notice on its village collectives. Wuhan, for example, has expressed

the determination to remove most of its urban villages in the name of urban redevelopment

and city beautification.

The remainder of this paper focuses on the interaction and stratification among different

social groups within urban villages. The aim is to understand the dynamics of social and

housing differentiation inside the villages by examining the emerging informal housing

rental market fostered by the unusual institutional arrangements that have given rise to the

urban village phenomenon.

Social Groups in Urban Villages

Housing conditions for different social groups in urban villages are not uniform, but

stratified. As mentioned previously, there are three major social groups in urban villages:

indigenous villagers, rural migrants and other urban hukou holders, including those with

local urban hukou and urban hukou from other cities.

For indigenous villagers, i.e. the landless farmers, urban villages not only provide space

for living, but a new form of temporary livelihood. For rural migrants, urban villages

provide inexpensive and convenient housing. There are also many employment

opportunities within urban villages, mostly in the informal service sector. Some have

managed to start their own small businesses, responding to the large demand for services

in urban villages. Urban hukou holders are mainly employees who used to work in those

small-scale and mostly street-run SOEs or COEs that were built on land that used to belong

to the village collective. Some of these SOEs and COEs rented a piece of land from a

village collective and built small-scale danwei (work unit) housing for their employees.

However, most of them were too small to be able to provide housing and their

employees had to rent in urban villages nearby and received financial subsidies in lieu of

direct housing subsidy. Some employees managed to build their own housing on the land

rented to their employers by the village collective. This group also includes a small

number of migrants with urban hukou from other cities, who are relatively better off

compared to rural migrants. Many of them were among the first wave of migrants to the

city and found cheap accommodation in the urban villages. They have often become

established in the micro-economy of the urban village, running grocery stores,

barbershops, small restaurants and so on.

These three social groups possess different endowments and resources, notably, capital,

skills, land rights and social entitlements. Indigenous villagers are obviously the most

advantageous group, possessing the use rights to the housing land in the village. They have

therefore become a privileged class in the village. Due to the constraints of educational

attainments and skills, they have generally failed to find more conventional jobs in the city.

Building and renting houses has therefore become the easiest way for them to make a

living with relatively high short-term returns.

In many urban villages, especially those in south coastal cities, share-holding

companies have been established to manage collective rental businesses. These companies

Social Groups and Housing Differentiation in China’s Urban Villages 677

develop various strategies to expand their rental businesses and maximize their margins.

Since the 1990s, village share-holding companies have collected money from indigenous

villagers and built factory workplaces, warehouses and apartments for rent and even for

sale, with profits shared among the villagers. Taking advantage of the ambiguous property

rights and the vacuum of state regulation, indigenous villagers are at the top of the social

ladder in urban villages. They are the housing providers and rentier class in urban villages.

Those urban hukou holders who have access to danwei housing or self-built housing in

urban villages are also comparatively privileged. However, they only have rights to the

housing for their own use rather than to the housing land itself, which means they are

unlikely to engage in renting business. Those urban hukou holders who rent from

indigenous villagers are less privileged still. Their housing conditions and housing rent are

determined by the informal housing market and the market broadly balances housing

supply and demand. In urban villages where the location is good and offers more job

opportunities, the rent is relatively higher and housing tends to be overcrowded. In urban

villages located on the city’s periphery, implying higher costs of commuting, the rent tends

to be cheaper while the infrastructure and housing facilities are less developed. Compared

to the rural migrants who rent alongside them, urban hukou holders are in a better position,

since they generally possess better quality and quantity of capital and skills, particularly

commanding higher incomes and having higher educational attainment. Compared to

indigenous villagers, this group is in a less advantageous position, not only because of lack

of rights to land but because they lack the closely organized social networks and

village institutional arrangements. With regard to conflicts between these two groups, the

indigenous villagers tend to have the upper hand. Urban hukou holders are therefore on

the second from top rung of the social ladder within urban villages.

Rural migrants have limited capital and skills and have access neither to subsidized

housing nor housing land in urban villages. They face double institutional discrimination,

in terms of housing and employment. Rural migrants are therefore the most disadvantaged

group within urban villages. As with urban hukou holders, the rent they pay and the

housing conditions offered by the villager landlords are adjusted by the supply-demand

relationship in the informal housing market. Market rent and housing conditions are

determined by the negotiation between indigenous villagers and rural migrants. In most

cases, rural migrants are in a very weak position to negotiate. However, in villages where

migrants from the same place of origin live together and are closely bonded by social

networks or kinship, it is noticeable that they can achieve more bargaining power over

conditions and rent. In this paper, the approach is not to investigate in great detail the

internal power structure of villages or the conflicts and negotiations between different

groups. Rather, an attempt is made to examine the influence of various indicators of

capital, skills, property rights and social entitlements to explain the dynamics of housing

differentiation. This is done using regression models. In particular, social networks are

included as an indicator of social capital to understand how it helps individuals, especially

those less advantaged rural migrants, to negotiate for better housing conditions in

urban villages.

Housing Differentiation in Urban Villages

To understand the patterns of housing stratification, empirical data are analysed that

were collected from a large-scale household survey in six Chinese cities. This survey

678 S. He et al.

is part of a bigger research project examining patterns of urban poverty and their

institutional causes and also looking for evidence of institutional innovations that have

emerged as individuals and organizations seek to negotiate more secure access to vital

civic goods and services.

Considering the complexity of the issue and the size of the Chinese urban population,

the surveyed cities were distributed in the coastal, central and western regions respectively

and included Xi’an, Guangzhou, Nanjing, Wuhan, Harbin and Kunming. Beijing and

Shanghai were not selected, because urban villages do not exist in the central city due to

strict land use control by the local authorities. In addition, it is necessary to look beyond

the experience of Beijing and Shanghai, two cities most familiar to the Western readers, to

portray a real picture of the Chinese city.

Xi’an is an industrial city in the north-western region and the capital city of a

comparatively underdeveloped hinterland. Guangzhou represents south coast cities that

have experienced a high level of marketization and openness. It is one of most developed

cities in China and has attracted a large number of migrants both from rural areas and other

cities. Nanjing represents a developed east coast city, also a provincial capital with a

strong industrial base. Fed by a comparatively developed hinterland, Nanjing enjoys a high

level of economic prosperity. Wuhan is a city in the central region with heavy industry.

It suffers from economic restructuring but is relatively better positioned in the process.

Partly due to its strategic location, Wuhan has developed a vibrant market economy,

attracting many migrants. Harbin is a city with severe de-industrialization problems. It is a

typical post-industrial city located in a less developed region and struggling to survive the

collapse of SOEs/COEs and high unemployment rates. Kunming is in the underdeveloped

south-western region and lacks industrialization. It suffers less from the economic

restructuring, and also has a smaller share of the economic dividends. According to local

statistics, by the end of 2008, there were around 72 urban villages in Xi’an; 139 in

Guangzhou; 71 in Nanjing; 147 in Wuhan; 43 in Harbin; 288 in Kunming.

In each city, two urban villages were selected, one from the inner city, the other one

from the urban fringe. In Harbin, where the progress of urbanization is comparatively

slow, only one urban village was selected, given the relatively small number of urban

villages in the city. In each village, households were selected based on their addresses,

using a fixed interval approach. Questionnaires were distributed to household heads.

Questions included socio-economic information pertaining to heads and their households,

e.g. hukou status, income and expenditure, education, employment, housing status,

commuting and relocation experiences. On average, 75 questionnaires were distributed in

each urban village, yielding 796 effective questionnaires from the 11 selected urban

villages. This is a survey of a purposive sample of urban villages in six representative

cities. The paper does not attempt to compare differences between these six cities, but

makes comparisons between different social groups located in similar physical and

institutional settings.

In addition to a general comparison of social groups in urban villages in the previous

section, Table 1 provides more details of the three groups. Among the three groups,

indigenous villagers have the largest household size and lowest schooling years.

Surprisingly, their reported monthly income per capita is relatively low. This is mainly

because most indigenous villagers are very cautious about disclosing their real income.

They therefore tend to under-report their rental income. In addition, indigenous villagers

have a larger household size, particularly a larger number of dependent children than the

Social Groups and Housing Differentiation in China’s Urban Villages 679

other two groups, which lowers the monthly income per capita. Nevertheless, 9.9 per cent

of indigenous villagers, the highest percentage among the three groups, reported that they

have more than 50 000 RMB household saving. This suggests that indigenous villagers

have actually accumulated a considerable amount of wealth, contrasting to their under-

reported monthly income. In all three groups more than half the respondents reported that

they have friends and relatives living in the same neighbourhood. Naturally, indigenous

villagers have the largest number of acquaintances, while the two groups have much

smaller numbers. In terms of household head’s occupation, urban hukou holders have a

higher profile than the other groups. Approximately one-third of urban hukou holders are

managers, professionals and technicians, while more than half of indigenous villagers are

engaged in the informal sector or are unemployed. For rural migrants, the most common

occupations are being self-employed and manual workers. Judging from the statistics from

the household survey, indigenous villagers do not have a higher socio-economic profile

than the other two groups, in terms of household structure, education attainment and

occupation. In a way, this suggests that the differentiation between the three groups mainly

lies in the entitlement to and the institution of land rights, as depicted in the previous

section.

Table 2 compares housing tenure between the three groups. It can be seen that the ratio

between the number of households in the first group and the other two is approximately

1:2.5 and 1:3.5 respectively. After subtracting the number of households living in non-

private-rental housing, on average one indigenous villager household provides rental

housing for one urban household and 3.2 migrant households. Contrary to the prevailing

perception, there is a variety of housing tenure in urban villages. Private rental and self-

built housing are two major types of housing tenure, which take up 60.7 per cent and 23.9

per cent of the total respectively. The remaining 15.4 per cent are public rental housing,

privatized public housing and subsidized/welfare housing. These houses mainly belong to

the type of small SOEs and COEs that have already been mentioned, which occupy land

that used to belong to the village collectives. These enterprises built small-scale housing

Table 1. Comparison of three social groups

Indigenousvillagers

Urban hukouholders

Ruralmigrants Total

No. of households 112 272 412 796Household size 4.08 3.77 4.05 3.96Schooling years 8.10 10.07 8.26 8.86Average monthly income/capita 584.21 836.94 582.93 665.80Household saving above 50 000 (%) 9.9 9.2 4.9 7.1Friends/relatives living in the sameneighbourhood (%)

76.8 50 52.9 55.7

No. of acquaintances 238.55 58 43.8 76.24HH occupation (%)Manager 1.8 8.5 5.3 5.9Professional 7.1 10.3 8.0 8.7Technician 2.7 10.7 7.5 7.9Self-employed 17.9 19.5 38.6 29.1Manual worker 17.9 19.9 29.6 24.6informal job/ unemployed 52.7 31.3 10.9 23.7

680 S. He et al.

complexes and either assigned or sold them to their employees. These enterprise-owned

houses only represent a very small proportion of housing units in the villages. Most

employees of these small-scale enterprises have had to rely on private rental housing or

self-built housing. Out of 796 respondents, only 12 households live in commodity housing,

which are in fact resale privatized public housing.

All indigenous villagers are homeowners, of which 89.3 per cent own self-built

housing that they rent out as well as live in and 10.7 per cent own inherited housing.

The latter group for various reasons have not managed to build new houses for renting.

Of the urban hukou holders, 40.8 per cent of households live in private rental housing.

34.2 per cent of them live in self-built housing and inherited housing, which suggests that

these people have been living in urban villages for a long time before the land value

increased. A total of 9.2 per cent of the urban hukou holders possess privatized pubic

housing and 7.4 per cent of them live in subsidized/welfare housing. These are the people

who used to work in small-scale SOEs and COEs. After housing reform, they purchased

the houses they rented from their employers at a heavily discounted rate. Since there are

not many SOEs and COEs in urban villages, only a limited amount of housing is in the

privatized public housing or subsidized/welfare housing categories.

The majority of rural migrants live in private rental houses. Only 3.4 per cent rent

danwei housing from small SOEs or COEs employees, and 6.3 per cent live in self-built

housing. Self-built housing for migrants only happened in urban villages where the land

value is comparatively low, and the contests over land rights are less acute. In addition, the

land rented to migrants by the village collective is usually fragmented and inaccessible,

which would otherwise have been turned into high density rental developments by

indigenous villagers. The so-called self-built housing for rural migrants are usually very

crude houses built as temporary shelters on the vacant land. When the land rent increases

or the village collective decides to clarify land rights, it is quite predictable that these rural

migrants will be driven away.

Table 3 compares housing conditions and housing expenditure among the three groups.

This table shows clear signs of housing stratification between indigenous villagers, urban

hukou holders and rural migrants, in terms of average housing floor area, housing quality

and satisfaction with housing conditions. Indigenous villagers are at the top of the

housing ladder with respect to various measurements of housing condition, rural migrants

are at the bottom, and urban hukou holders are in between. The ratio of average housing

floor area between urban hukou holders and villagers is 1:1.7 and 1:3 between migrants

Table 2. Comparison of housing tenure

Indigenousvillagers

Urban hukouholders

Ruralmigrants Total

No. of case 112 272 412 796Private rental (%) 0.0 40.8 90.3 60.7Danwei rental (%) 0.0 4.0 3.4 3.1Self-built (%) 89.3 23.5 6.3 23.9Inherited (%) 10.7 10.7 0.0 5.2Privatized public housing (%) 0.0 9.2 0.0 3.1Subsidized/welfare housing (%) 0.0 7.4 0.0 2.5Commodity housing (%) 0.0 4.4 0.0 1.5

Social Groups and Housing Differentiation in China’s Urban Villages 681

and villagers. Indigenous villagers and urban hukou holders also enjoy much better

housing quality than rural migrants, and they are more satisfied with their housing

conditions. However, rural migrants spend much more on housing than the other two

groups. Comparing the housing expenditure ratio (the ratio of housing expenditure to

total household expenditure) between the groups, indigenous villagers and urban hukou

holders spend a relatively small proportion of their household expenditure on housing

(5.04 per cent and 9.13 per cent respectively), whereas rural migrants spend 16.86 per

cent of total household expenditure on housing. Urban hukou holders have the advantage

of either owning their homes, having purchased them at a discounted price, or live in

subsidized housing. Villagers have the advantage of owning their homes and also owning

rental accommodation. Migrants have no such advantage and have to spend a

considerable proportion of their household expenditure on renting housing.

Table 4 compares housing mobility and changing housing conditions in the last 10

years. First, the number house moves are compared between the three groups. The rather

low values in the Table do not seem to reflect an accurate picture of housing mobility,

which intuitively should be higher. These responses show a different pattern of housing

Table 3. Comparison of housing conditions and expenditure

Indigenousvillagers

Urban hukouholders

Ruralmigrants Total

Average housing area per capita 43.58 26.27 14.56 22.61Housing quality indexa 0.58 0.49 0.32 0.41Satisfaction indexb 0.60 0.55 0.51 0.54Housing expenditure (yuan/month) 167.06 156.73 272.88 218.30Housing expenditure ratio 5.04 9.13 16.86 12.56Average income per capita(yuan/month)

512.60 817.85 607.07 665.80

Note: a Housing quality index ¼ SXi/6. It is a composite of six qualitative aspects of housing, each givena binary value {1,0}: private kitchen; private bathroom; electric shower; liquefied or piped gas; airconditioning; and Internet.b Satisfaction index ¼ SXi/50. It compounds interviewee’s satisfaction with their current housingsituation for 10 dimensions: housing area; housing quality; community services; schools and nurseries;markets and commercial services; transportation conditions; public security; hygiene; green space; overallsatisfaction. A single scale (0 ¼ not applicable, 1 ¼ very dissatisfied, 2 ¼ dissatisfied, 3 ¼ neutral, 4 ¼satisfied, 5 ¼ very satisfied) is used to calculate the index.

Table 4. Comparison of housing mobility and changing housing conditions in last decade

Indigenousvillagers

Urban hukouholders

Ruralmigrants Total

Number of moves 0.35 0.68 1.44 1.01Significantly improved (%) 0.0 4.5 4.0 3.6Slightly improved (%) 1.9 8.7 16.0 11.6No change (%) 50.9 50.0 47.7 48.9Slightly deteriorated (%) 21.3 20.1 27.4 24.1Significantly deteriorated (%) 25.9 16.7 4.9 11.8

Total (%) 100 100 100 100

682 S. He et al.

mobility in each of the three groups. Rural migrants not surprisingly have the highest

housing mobility, while urban hukou holders are less mobile and indigenous villagers are

the most stable. Surprisingly, in the light of extensive village building, there are quite a

few indigenous villagers who reported deteriorated housing conditions. This is the result

of villagers making a trade-off between rental income and personal housing consumption.

To make as much money as possible, villagers have invested in taller and bigger structures

on their fixed land supply. Over time, the villages have become overcrowded and the built

environment in the village inevitably deteriorates. Urban hukou holders in the village also

appear to suffer from the overcrowded and worsening built environment. Among the rural

migrant group, a greater proportion of respondents reported improved housing conditions.

This is mainly due to their comparatively low expectations on housing in the city. There

are some who have managed to move up the housing ladder after living in the city for a

while. Some have also moved down the housing ladder, and this is likely to be either in

order to save money for other household expenditures or because of having to take a lower

paid job.

Table 5 shows the results of three linear regression models, on average floor area,

housing quality index and housing expenditure ratio, respectively. The purpose is to

examine how housing conditions in urban villages are affected by various predictors.

Independent variables are grouped into three categories. The first category is capital and

skills, covering household income and saving, a series of indicators of human capital and

social capital, and household head’s occupation. The second category is property rights

and social entitlements, including hukou status, MLSS (Minimum Living Standard

Scheme, which provides social relief or assistance to poor urban households by the local

government) subsidy, and housing tenure. Hukou is considered as an indicator of property

rights and social entitlements, because it is associated with a bundle of citizenship rights,

including access to public education, housing, healthcare and employment to a lesser

extent. The third category includes indicators of household structure, the location of the

urban village, and the city in which urban villages are located.

First, there is a look at the regression model for average floor area. Income and saving

are two of the most important independent variables decisive for housing differentiation.

Surprisingly, ‘schooling years’ is negatively associated with average floor area for the

reference class in the model: non-local rural hukou (rural migrant) informal sector workers

renting privately. This suggests that for this group of respondents, the effect of human

capital has been weakened by land rights and other institutional and life chance factors.

Among other indicators of human capital, only business licence is statistically

correlated with living space. This can be explained by the fact that many families running

small business in the villages, such as grocery shops, barbershops or small restaurants, are

often combining living space and business-operating space. Therefore, their living space

tends to be slightly larger. Household head’s occupation does not show statistical

significance in this regression model. Looking at the indicators of property rights, local

urban hukou shows strong statistical significance. Other household attributes being equal,

rural migrants have a significantly smaller amount of living space than local urban hukou

holders whom they compete against in the urban village rental market. This is probably

due to rural migrants’ greater willingness to forgo comfort in order to save or remit more

or because of higher education and medical costs.

With private rental tenure set as a reference, self-built housing, inherited housing and

commodity housing offer significantly more floor space. Among all predictors in the

Social Groups and Housing Differentiation in China’s Urban Villages 683

Table

5.

Lin

ear

regre

ssio

nm

odel

of

floor

area

,housi

ng

qual

ity

and

housi

ng

expen

dit

ure

rati

o

Av

erag

efl

oo

rar

eap

erca

pit

aH

ou

sin

gq

ual

ity

ind

exH

ou

sin

gex

pen

dit

ure

rati

o

BT

rati

oB

Tra

tio

BT

rati

o

Co

nst

ant

15

.66

21

.82

2*

0.1

08

1.7

15*

25

.67

26

.39

2*

**

Capitalandskills

Inco

me

an

dsa

vin

gH

ou

seh

old

inco

me

0.1

15

3.1

14

**

*0

.16

65

.51

8*

**

0.0

14

0.3

69

Ho

use

ho

ldsa

vin

g0

.09

92

.75

1*

**

0.1

19

4.0

22*

**

20

.04

82

1.3

21

HH

hu

ma

na

nd

soci

al

cap

ita

lS

cho

oli

ng

yea

rs2

0.0

74

21

.85

0*

0.0

49

1.5

13

20

.04

22

1.0

49

Par

tym

emb

ersh

ip2

0.0

21

20

.61

10

.01

50

.54

40

.00

70

.20

8H

ealt

hco

nd

itio

n1

0.0

09

0.2

82

20

.02

22

0.8

36

20

.02

92

0.8

98

Bu

sin

ess

lice

nse

0.0

59

1.6

98

*0

.02

30

.80

30

.13

23

.78

9*

**

Dri

vin

gli

cen

se0

.03

51

.01

40

.05

41

.91

5*

20

.03

62

1.0

56

Tra

inin

g0

.03

10

.85

22

0.0

05

20

.17

92

0.0

25

20

.68

9F

rien

ds/

rela

tiv

esli

vin

gin

the

sam

en

eig

hb

ou

rho

od

0.0

19

0.5

44

0.0

07

0.2

40

20

.02

72

0.7

81

No

.o

fac

qu

ain

tan

ces

0.0

04

0.1

17

0.0

29

1.0

10

0.0

13

0.3

67

HH

occ

up

ati

on

(ref

:in

form

aljo

b)

Man

ager

20

.01

32

0.3

43

0.0

55

1.7

77*

20

.01

42

0.3

56

Pro

fess

ion

al2

0.0

26

20

.64

20

.06

51

.96

6*

20

.05

92

1.4

61

Tec

hn

icia

n2

0.0

35

20

.87

10

.01

60

.49

92

0.0

20

20

.49

8S

elf-

emp

loy

ed2

0.0

07

20

.13

30

.07

81

.92

4*

0.1

12

2.2

47

**

Man

ual

wo

rker

0.0

35

0.7

87

0.0

21

0.5

61

20

.05

72

1.2

58

Property

rights

andentitlem

ents

Hu

kou

(ref

:n

on

-lo

cal

rura

lh

uko

u)

Lo

cal

urb

anh

uko

u0

.10

52

.00

3*

*0

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82

.50

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*2

0.0

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21

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3L

oca

lru

ral

hu

kou

0.0

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0.0

41

20

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32

0.0

72

20

.07

42

1.5

79

No

n-l

oca

lu

rban

hu

kou

0.0

33

0.9

01

0.0

22

0.7

53

20

.08

22

2.2

75

**

ML

SS

Rec

ipie

nt

20

.04

52

1.3

43

20

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1.2

95

20

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72

0.5

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usi

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(ref

:p

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g0

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9.7

48*

**

20

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62

3.9

54

**

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her

ited

ho

usi

ng

0.1

53

3.9

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**

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9*

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92

2.0

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**

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vat

ised

pu

bli

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g0

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.03

1*

**

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**

684 S. He et al.

Su

bsi

dis

ed/w

elfa

reh

ou

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g0

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81

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00

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74

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6*

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2.4

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mm

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ity

ho

usi

ng

0.0

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2.0

75

**

0.1

42

5.1

58*

**

20

.05

22

1.5

45

Household

structure

andothers

HH

age

20

.02

32

0.5

24

0.0

35

0.9

64

20

.04

92

1.1

04

HH

mar

ital

stat

us2

0.0

94

2.6

59

**

*2

0.1

05

23

.61

4*

**

20

.00

22

0.0

42

Ho

use

ho

ldsi

ze2

0.0

99

22

.85

2*

**

20

.07

42

2.6

00*

*2

0.0

11

20

.30

4N

o.

of

un

emp

loy

ed2

0.0

42

21

.14

82

0.0

05

20

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02

0.0

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20

.17

9N

o.

of

dep

end

ent

chil

dre

n2

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20

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52

0.0

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2V

illa

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loca

tio

n3

0.0

23

0.6

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20

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2.4

68*

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0.0

86

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ity

ref:

Ku

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82

1.4

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20

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*2

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ang

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han

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td.

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,0¼

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tral

.

Social Groups and Housing Differentiation in China’s Urban Villages 685

regression model, self-built housing has the strongest effect in increasing average

floor area. The exertion of a (de facto) right to build one’s own housing at a relatively early

stage of urban village development gave these early rural migrants an advantage in living

conditions. Among household structure variables, only household head’s marital status

and household size show statistical significance. Married rural migrants who live with

their spouses obviously have smaller floor area per person than those who do not have

spouses or do not live with them. Similarly, large household size lowers average floor area.

This shows that rural migrant renters do not have the luxury of increasing housing

consumption in line with household housing space needs. Although the location of the

village does not show statistical significance, the city in which the village is located does

matter. With Kunming as a reference, both Guangzhou and Nanjing are negatively

associated with average floor area, since both cities are heavily populated and have

extremely high densities.

Turning to the regression model of housing quality index, a similar result to the floor

area model is found. Household income and savings are strongly associated with better

quality space. This reveals the existence of a degree of sophistication in this apparently

disorganized housing market. Money (small increments of it) can apparently buy better

quality, which given the overall quality of urban village properties, must come in small

increments. Among the eight indicators of human and social capital, interestingly, only

having a driving licence is significantly associated with housing quality index. Holding

income constant, being able to drive implies better housing quality. This is probably

because people who can drive do favours for landlords, e.g. they are occasionally asked by

landlords to run errands, so that those with a driving licence have access to better quality

housing without paying extra rent.

In terms of household head’s occupation, being a manager, a professional or

self-employed improves housing quality for rural migrant renters. In urban villages,

self-employed status means having the capital to start a small business. These people may

not have more income (income is held constant in the model) but they may have used the

same advantage that led them to start up a business to negotiate a better quality home

rental. This also seems to imply that household heads who are managers, professionals or

are self-employed tend to invest more money to improve their housing quality whereas

they may not invest to improve floor area. This may indicate that the elasticity of supply of

housing quality is greater than that of extra floor space. This makes sense since it is

relatively easier for a landlord to invest in internal space improvements, and a quality-

differentiated market can develop more easily than a size-differentiated housing market.

In the category of property rights and entitlements, again, local urban hukou shows

statistical significance. This suggests that compared with local urban hukou holders, rural

migrants not only have smaller living space, but also suffer from lower housing quality.

Despite the generally low housing quality in urban villages, local urban hukou still makes a

significant difference. With private rental housing set as a reference, all types of housing

tenure are significantly related to better housing quality. Again, among all predictors in the

regression model, self-built housing has the highest standard co-efficient. This suggests

that rural migrants in self-built housing not only have more floor area, but also better

housing quality. The same reasons as already proposed for superior space in this tenure

category probably apply here.

In the final category, household head’s marital status and household size are negatively

related to housing quality. This suggests that although married migrant couples living

686 S. He et al.

together tend to have lower average floor area than migrants living alone, they enjoy better

housing quality, i.e. they are more willing to and/or capable of improving their housing

quality. It is easy to understand that large household size tends to lead to lower housing

quality. The location of the urban village also shows statistical significance in this model.

Inner-city urban villages tend to have better housing quality. This is mainly because urban

villages in the inner city are more developed and have had a longer time to accrue internal

improvements and facilities. With Kuming set as a reference, Xi’an and Nanjing are

negatively associated with housing quality index, while Guangzhou and Wuhan

are positively associated. This suggests that compared with Kunming, rural migrants in

Xi’an and Nanjing suffer from lower housing quality, while rural migrants in Guangzhou

and Wuhan enjoy better housing quality. This complies with the findings here during the

fieldwork: urban villages in Guangzhou and Wuhan are generally newer and more

developed, while urban villages in Xi’an and Nanjing are generally more dilapidated and

less developed.

The third regression model in Table 5 looks at predictors of housing expenditure ratio.

Neither household income nor household saving are significantly related to the ratio. This

suggests that for rural migrants renting in urban villages, the proportion of household

expenditure spent on rent does not increase with income or saving. This might be taken as

an indicator of the tight budget constraints that all rural migrants of these villages

experience. They have to make sure that any increase in housing expenditure does not

compromise the ability to raise the consumption of other necessities and provision for

future expenses.

In the category of household head’s human and social capital, business licence is the

only indicator significantly related to housing expenditure ratio. For the same reason stated

in the floor area regression model, people running a small business in an urban village

normally require more housing space, which thus involves higher housing expenditure.

This also explains why the self-employed category of occupation of household head shows

statistical significance.

In the category of property rights and social entitlements, non-local urban hukou is

significantly related to lower housing expenditure ratio. This confirms the findings in

Table 3, which indicate rural migrants having the highest housing expenditure ratio. This

also suggests that non-local urban hukou holders generally lead a better life than rural

migrants. Since the former expend a smaller proportion of their monthly expenditure on

housing than the latter, they are, therefore, able to spend the money to improve their life

quality. Compared with private rental housing, except for commodity housing, all other

forms of housing tenure are negatively associated with housing expenditure ratio. Once

again, self-help housing has the highest absolute value of standardized coefficient among

all predictors, which means it has the strongest effect in reducing housing expenditure

ratio. Village location is also significant. Rural migrants in villages nearer the urban

periphery have lower housing expenditure ratios than those in villages nearer the inner

city, since housing rents in the centre are much higher than those in the periphery. Finally,

the housing expenditure ratio for rural migrant renters also varies in different cities. Xi’an

and Wuhan tend to have lower housing expenditure ratio than Kunming, while the ratio in

Guangzhou is significantly higher. To some extent, this result is related to different

rental prices in different cities: rental prices in Guangzhou’s urban villages are much

higher than those in Kuming, while rental prices in Xi’an and Wuhan’s urban villages are

comparatively lower.

Social Groups and Housing Differentiation in China’s Urban Villages 687

Overall, indicators of property rights and social entitlements overwhelm indicators of

capital and skills in predicting housing conditions in urban villages, i.e. there are more

variables in the former category showing statistical significance than those in the latter

category. A broad set of institutional factors beyond market dynamics still has a strong

effect in deciding housing conditions. For example, hukou still has a very strong impact on

the process of housing differentiation. Non-local rural hukou continues to be a huge

constraint for migrants climbing up the housing ladder in the city, while local rural hukou

holders, i.e. indigenous villagers, and other urban hukou holders are relatively better off.

Compared with private rental housing, most other types of housing tenure are related to

more floor area, better housing quality and lower housing expenditure ratio. Self-built

housing stands out as the predictor with the strongest association for better housing

conditions. This finding clearly shows that access to housing land and the rights to capitalize

housing land is a particularly significant predictor for housing status in urban villages.

The adjusted R square values in the three regression models are quite small. This can partly

be because the complexity of housing conditions in urban villages makes it particularly

difficult to develop a well-specified model. Although regularity has been found in urban

village housing markets, these are very disorderly, immature and impure markets, and as

has been said, are heavily shaped by non-market institutional factors. This means that there

is much unexplained variance in the models.

Conclusion

An institutional analysis of the formation and social stratification of China’s urban villages

shows how the incomplete and capricious institutions under market transition give birth to

the unusual landscape in these unique urban spaces, in physical terms and socio-economic

terms. Specifically, property rights redistribution resulting from the dual land system and

the urban-centred wealth accumulation regime; the absence of housing provision for the

large number of rural migrants; and the regulatory vacuum and temporary tolerance by the

city government, all contribute to the emergence of urban villages. Although often seen as

the quintessential poor neighbourhoods of Chinese cities, urban villages do not have a

homogenous social composition. With different social groups possessing different

quantities and qualities of endowments and resources, a stratified social structure has

emerged in parallel with the villages themselves. Socio-economic stratification is

manifested in various ways, but is seen particularly in the housing differentiation among

the different social groups that have been discussed.

Evidence from 11 urban villages in six Chinese cities shows a great deal of socio-

economic and housing heterogeneity, more so, in fact, than in other types of urban

neighbourhood in Chinese cities. Huge urban redevelopment projects and the emerging

housing market have changed those highly-mixed inner-city neighbourhoods into

gentrified housing estates accommodating relatively homogenous middle to high-income

residents (He, 2007; Li & Wu, 2006). The result is an increasingly stratified socio-spatial

structure in the metropolitan area and an increasingly homogeneous residential

composition within a certain type of neighbourhood, i.e. urban residents are sorting and

regrouped according to their socio-economic status towards differentiated neighbour-

hoods. As a unique urban landscape in the Chinese city, urban villages are yet to be

affected by the waves of urban redevelopment, and the diverse residential composition

688 S. He et al.

temporarily remains. Nevertheless, the dynamics of housing differentiation in urban

villages shares some similarities with that of the city as a whole.

As some scholars’ works have shown, there is a persistent effect of institutional settings

inherited from the socialist period deciding the housing situation in urban China

(Huang, 2003; Li & Siu, 2001; Logan et al., 1999). For example, Logan et al. (1999)

showed the continued importance of remaining institutions and associated political power

in the pre-reform period to produce/reinforce housing inequality. Li & Siu (2001) pointed

out that institutional factors, e.g. danwei and the municipal housing authority, rather than

the market per se remain as the primary driving force for housing mobility in urban China.

Huang (2003) argued that the hukou system continues to influence housing consumption in

post-reform China, i.e. households with rural or temporary hukou are at a disadvantage in

the housing market.

In this study, together with income, institutional factors, especially the institutions

defining property rights and social entitlements, are decisive for housing conditions.

In comparison, the differentiating influence of some market factors (such as the labour

market factor of educational attainment), and other market-delivered endowments such as

occupation and household head’s business licence, do show an expected correlation with

housing status. Overall, non-market institutions (endowments coming from legacy

socialist institutions) have a stronger role than market factors in determining housing

differentiation. This reflects unusual dynamics of social and housing differentiation in the

Chinese city. In particular, landless farmers make use of the ambiguous property rights to

make sufficient margins to become a rentier class. Many urban hukou holders in the

villages have a relatively secure housing tenure and better social entitlements compared

with rural migrants, although they do not possess the use rights to the housing land and

thus are not able to capitalize the rights into rental capacity. As the least advantageous

group in the urban village, many rural migrants suffer from housing poverty and inequality

by paying the highest housing costs while bearing the worst housing conditions.

Social and housing differentiation in urban villages has strong non-market institutional

roots, including institutions that remove land rights from farmers in the peri-urban areas to

expand urban territory; institutional discrimination against rural migrants who face higher

housing costs compared to their urban counterparts; and temporary tolerance to the highly

dense and low quality development in urban villages. The temporary tolerance has allowed

the newly privileged rentier class to gain windfall profits from the distorted housing rental

market. This above anything else has created a stratified social structure and housing class

differentiation in urban villages.

The future of urban villages is uncertain. Their threatened redevelopment (common in

the policies of many cities) endangers housing tenure security for indigenous villagers,

rural migrants and urban hukou holders alike. It also threatens the livelihood of the

indigenous villagers and, ironically, threatens the economies of the city as a whole, which

relies on the low cost labour of the villages’ residents. The threat is rooted in the

ambiguous property rights and ambiguous status of the informal sector that thrives in

urban villages.

In various ways, the population of urban villages is highly mobile. Indigenous villagers

move out of their village by purchasing commodity housing elsewhere; migrants come and

go. Within, there is also mobility as has been shown here—tenants moving to improve

their position and grades of housing emerging and a market to allocate by rental price.

Even after the dissolution of urban villages, as is probably inevitable for many, the housing

Social Groups and Housing Differentiation in China’s Urban Villages 689

differentiation that has been seeded within them, through the mixed influence of legacy

socialist institutions and new market institutions, will continue as their former residents

move elsewhere with the assets and more general housing market power that they have

accrued while they were urban villagers. The housing stratification that is developing in

urban villages forms an important part of the longer-term urban restructuring process in

the Chinese city.

Acknowledgements

We would like to thank the anonymous reviewers for their useful and constructive comments. This research is

supported by two grants awarded by the National Natural Science Foundation of China (Ref: 40801061 and

50808082), one grant awarded by the Economic and Social Research Council (ESRC) (RES-167-25-0005, UK),

and one grant awarded by the German Research Foundation (DFG) (SPP 1233, ref. no. BR 3546/1-2). The usual

disclaimers apply.

Note

1 Source: The New York Times online news: China enacts major land-use reform. Available at http://

www.nytimes.com/2008/10/20/world/asia/20 china.html?_r¼1 (Accessed 10 October 2009).

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