China’s urban renewal movement, known as the “old village renovation,” has been plagued by rights disputes for over 15 years, resulting in slow progress. With the recent economic downturn in China, authorities have initiated a new wave of “old village renovation” in an attempt to boost the real estate market and stimulate local economies. However, due to tight local finances and resistance to relocation, many urban village renovation projects have been caught in a dilemma.
According to official Chinese Communist Party sources, the core of the “old renovation” involves demolishing and renovating old towns, old factory buildings, and old villages within the provinces, with a focus on the renovation of urban villages. The “old renovation” movement was first carried out in Guangdong in 2009.
Recent reports from Guangdong’s official media revealed that on January 13, 2025, the last urban village renovation project in Zhujiang New Town CBD, Xiancun Village in Tianhe District, which lasted for 15 years, finally completed the removal of the final remaining households, signaling the completion of the Xiancun Village renovation project constructed by the state-owned enterprise Poly.
Xiancun Village in Tianhe District started its renovation in February 2010 and after more than a decade, there are still over ten village houses yet to be demolished and relocation efforts are facing challenges.
This forced removal operation is just one scene in a recent nationwide wave of new old village renovation projects.
In April 2023, the Chinese Communist Party’s Central Political Bureau proposed advancing urban village renovations in “super-large and mega cities.” In November of last year, the Ministry of Housing and Urban-Rural Development and the Ministry of Finance jointly issued a notice urging localities to accelerate urban village renovations, expanding the “old renovation” policy support from the initial 35 cities to nearly 300 cities at the prefectural level and above. In January 2025, the State Council once again urged the promotion of “old renovation.” Local governments in the 31 provinces of China have successively released “work plans” related to “old renovation,” with Guangzhou claiming that 52 old renovation projects will be accelerated.
Despite the official “impressive” plans and promotions, many ongoing urban village renovation projects have been found to be facing difficulties.
An article by Voice of America on February 14 this year reported that the Chinese government’s aggressively pushed “urban village renovation” plan, which was once seen as a crucial engine to drive the real estate market and boost local economies, is now encountering delays or stagnation due to economic downturn, financial constraints, and increased resistance to relocation.
Liu Zheng, a resident of a town in Panyu District, Guangzhou, mentioned that there were two villages in their town originally planned for renovation. However, residents calculated that they would incur losses from relocation and were hesitant because of the economic downturn. As a result, the project was halted, and the government did not announce any further actions. Those villagers who previously received living subsidies returned to their original homes. The demolition had not started yet and was put on hold.
In October 2024, Niu Hong, Minister of the Ministry of Housing and Urban-Rural Development of the Chinese Communist Party, announced plans to implement an additional one million units for urban village renovation and dilapidated housing renovation through monetary resettlement. The central government requires local governments to support special bonds, policy financial institutions to provide special loans for urban village renovations, and encourages commercial banks to provide loans for urban village renovations.
Economic Observer reported last year that urban village renovations are expected to drive an investment scale of about 10 billion square meters over the next five years, providing effective support to the real estate market. On average, it will generate approximately 44 million square meters of new residential demand each year. The renovation of urban villages in 21 super-large and mega cities nationwide can generate direct investments exceeding one trillion yuan, driving other investments of over 1.5 trillion yuan, totaling over 2.5 trillion yuan. First Finance reported that if estimated at one million yuan per unit, this resettlement, if all done through monetary means, is expected to bring about an increase of about one trillion yuan in the real estate market.
However, Beijing-based macroeconomic researcher Ma Yue told Voice of America that “these are just fake projects, many figures are released to boost market confidence.” It’s unclear where the funds for urban demolition and relocation are going, and where the money comes from.
Ma Yue cited the example of a large-scale urban village renovation near the Shanghai Bund, which could not be completed in the end. “Because after those people moved out, there was no money for further renovations. Now it’s like a ghost town, unable to be demolished anymore.”
Ma Yue, who resides in Beijing, also pointed out that areas such as Changping and Wangjing in Beijing have some low-cost housing or semi-basements, but there are no large-scale demolitions in sight. He believes that the current issue with urban village renovations is the lack of financial resources. Some projects have been taken over by the government, while some relocated residents, but there are no developers for the subsequent development. Currently, very few real estate developers have the capability to undertake such projects, leaving them idle. “At least those areas in Shanghai seem unlikely to be further developed at the moment.”
In the first half of 2022, well-known property developer Times China withdrew from several old renovation projects in Guangzhou and requested a refund of the initial investment. The withdrawal of real estate developers from the “old renovation” projects had sparked concerns.
On November 8, 2024, just three days before the end of the US election, the Chinese authorities introduced a 10 trillion yuan debt conversion plan to help local governments alleviate implicit debts in response to the impact of Trump’s return to the White House.
Ma Yue explained that this 10 trillion government debt is to reduce the financial burden on local governments. Additionally, there is 2 trillion yuan allocated for urban village renovations, corresponding to the prefecture-level cities for the 300 urban village renovation projects from last year. However, the central government needs to issue national debts, which were temporarily suspended in January 2025. Before that, starting from last December, all banks rushed to buy bonds because they had no other assets. The interest on those bonds was too low, leading to high systemic risk for banks. Therefore, the issuance of bonds was suspended before the Chinese New Year and has not resumed.
“If this project is not restarted, it means that the 10 trillion and 2 trillion plans cannot proceed,” Ma Yue said. “If prioritized, the 10 trillion plan must come first. The first priority is to repay the governments’ debts that need to be repaid immediately, including wage arrears. Hasn’t the salary of civil servants increased? These are the top priorities. Projects like urban village renovations that do not have returns will certainly be pushed back.”
The Chinese Communist Party has repeatedly urged the advancement of “old renovation.” During the early stages of the deployment of the renovation in April 2023, more than 4400 urban villages with approximately 55.5 million residents were identified in the eight super-large cities in China – Beijing, Shanghai, Shenzhen, Chongqing, Guangzhou, Chengdu, Wuhan, and Tianjin.
The “old renovation” movement involves the interests of governments, real estate developers, and villagers. A recent report by the British Financial Times stated that the nationwide push by the Chinese Communist Party to renovate urban villages on a large scale, turning them into so-called “new quality production” industrial parks, had caused concerns among many small business owners of lower-end enterprises about their livelihoods.
Liu Zheng, who is engaged in wholesale of small commodities, mentioned that the “urban village renovation” projects in Guangzhou had affected areas such as Kang Le Village and Lujiang Village in Haizhu District. When Liu passed by in early December, it seemed that the demolition had almost been completed, leaving behind ruins. These areas housed nearly 20,000 apparel manufacturing and accessories factories, with a messy construction layout where over a hundred thousand people worked and lived, creating the clothing kingdom in the Pearl River Delta.
In the last two years, due to urban village renovation and relocation in Guangzhou, the fate of this massive garment industry has become a focal point of the news. The Kang Lu Village renovation project, with a cost exceeding 30 billion yuan, initially approved by the village representatives back in 2011 for relocation, only commenced construction in July 2023.
Recent reports also indicated that there are numerous small to medium-sized clothing factories closely tied to international e-commerce platforms such as SHEIN in the Wansheng Business District in Dashi and Nancun in Panyu District, Guangzhou. Most of the workers here reside in the nearby urban villages, facing the double pressure from urban village renovations and e-commerce, challenging their future survival.
The urban village workers in Guangzhou are facing a double blow in the future, and their survival is worrisome.