Course:GEOG352/2020/Land and Housing Development in Hangzhou

With the rapid process of urbanization around the world, land and housing developments have increasingly gained attention in cities. Urban activities require land space such as commercial, industrial, or agricultural lands. Therefore, the improvement of urban functions requires the rational use of limited land resources to maximize its benefits. Land for housing is an essential part of urban land use; the extent of land and housing development will promote or limit the process of urban construction and economic development. The land and housing development concept entails landscape alteration from its natural state to accommodate housing units. This concept is essential as far as the Global South is concerned. It helps to achieve a uniform design practice and efficient planning that ensures maximum use of the limited land resources —for instance, connecting the developing urban area to social amenities such as sewage systems, health care, and infrastructure. Additionally, land and housing development helps to achieve political objectives  and eradicate the slum challenges and urban land conflicts in the Global South.

As a city in the Global South, Hangzhou is quickly becoming a first-class city in China and exhibits high-speed urban growth. There has been rapid development of buildings to accommodate the ballooning city population. Notably, Hangzhou has early on adopted a polycentric structure to spearhead land and housing development due to market forces and government planning efforts. This structure has allowed the city to expand rapidly in different directions. In 2016, Hangzhou hosted the G20 summit, which greatly enhanced Hangzhou's reputation and international popularity. The summit was said to be one of the major driving forces for the significant development of land and housing in Hangzhou by the government. Many farmlands and unused lands on the outskirts of Hangzhou were bought and converted into public places and residential areas. The summit enabled the Hangzhou authorities to undertake measures to ensure the city planning efforts are followed.  Our Wiki looks at how land and housing development spurred by global events has led to a change in governance and how it affects local stakeholders.

Overview

The theme of this wiki is land and housing development, this concept entails the environment being altered from one form to another and will focus on the rapid development of public and private spaces in the East, mainly that of housing units in Hangzhou. Rapid development in terms of governance, the economy and the physical built environment have allowed the city to quickly raise its reputation from a low-class city to a high-class city. With this being a trend along the East and South there would undoubtedly be issues and unforeseen effects of multiple cases of rapid development around the world through governance and the privatization of lands. This topic is important due to there being effects on the local population and additionally on the global context. Locally, the gentrification of people can be seen to be both negative and positive. From a western point of view, gentrification of a neighborhood is generally perceived to be negative; in the context of Hangzhou, the gentrification of people can be a good sign for landowners. In having their land taken from them by the government, they are compensated with large amounts of money and the promise of property on the newly developed lands. The downside to this is the perceived loss of identity, history and culture among the people who have inhabited the lands. In addition,  there is a rising concern of who will continue to supply the food if everyone moves to urban centers or if the farmlands are redeveloped into other forms of infrastructure. Globally, the topic of rapid development of public and private land in general can pose to be a major issue if not carefully monitored. Firstly, the rapid development of one city is manageable and can be accounted for but when many cities in the Global South and East start developing at equally fast rates it can take a large toll on the environment through the loss of carbon sinks and emissions of carbon dioxide. Secondly, the development of rural land poses two additional problems, the movement of people from rural to urban in search for opportunity and the loss of farmlands. The scope of this study focuses mainly on Hangzhou as a perfect storm of factors have seemingly allowed itself and other cities around the world to quickly develop in the context of its economy, governance, and infrastructure. Furthermore, this form of development seems to be increasingly  common among cities in the Global South and East. Currently, Hangzhou is developing at an incredible rate with the rapid development and stimulus applied by the technology sector and the G20 Summit held in 2016. These stimuli among many things have spurred the Chinese government into action with large scale development projects aimed to foster the growing economy and population but has since switched to an approach with more of a focus on environmental preservation and protection amid the development

Case Study of Theme/Issue

The outcome of rapid development in Hangzhou’s housing and land has led to a series of outcomes, both positive and problematic.

Positive Outcomes

Economic and Population growth

On a positive note, Hangzhou’s long-term residential population growth rate increased from 0.5% in 2013 to 3.6% in 2018; Furthermore, Hangzhou was also rated as one of China’s top ten attractive cities for foreign professionals for eight consecutive years as of 2018. The G20 Summit in 2016 acted as a stimulus to Hangzhou’s economy, which the Chinese government called the post-G20 era. The average housing price in Hangzhou was approximately 2,600 CNY per square meter in 2001, which grew to around 14,000 CNY in 2010 and remained stable until 2016. After the G20 Summit, housing prices rapidly rose from 16,000 CNY per square meter to 24,000 CNY as of 2018.

Hangzhou’s local government initiating suburban land development supported the government with accumulation of capital. In fact, Hangzhou’s land-reserve system has been so successful in raising public funds, that Hangzhou has become a model for over 2,000 cities and counties across China. In China, local governments act as entrepreneurs and can earn off-budget land profits through expropriating suburban land. Since land leases can generate revenue at a fast rate, local Chinese governments depend more on land-based fiscal revenues than on betterment taxes and property-based taxes. Hence, land transactions have fixed deficits of local governments from funding more than 50% of investments in infrastructures of Chinese cities. Since Hangzhou has adopted an authoritarian approach to the land-reserve system in response to competition from other cities in the Yangtze River Delta such as Shanghai, Nanjing, Suzhou, Wuxi and Ningbo - the local government acts as an aggressive monopolist in expropriating land and determining land prices.

Suburbanization

In Hangzhou’s process of suburbanization, the city authorities relocated industries that cause heavy pollution from the center to nearby areas to preserve the environment of the inner city. During the late 1990s, many factories relocated to make space for high-end property development as they were returned with a 40% share of the revenue from transferring property to a different owner. Moreover, the development of real estate in the suburbs of Hangzhou has caused a decentralization of population, as the population in downtown decreased while the suburban population increased. For example, Jiangcun Town had attracted a large population of urban residents to its town, causing an increase in residents from 59,000 residents in 2000 to 117,000 residents in 2010. Consequently, although the inner city (1.7% of total area) of Hangzhou had accommodated 16.6% of the total population in 2000, by 2010 the population in the inner city decreased to 13.9%. Meanwhile, the inner suburbs (19.6% of total area) had originally accommodated 37.8% of the population and increased to 43.1% by 2010. Thus, the commodification of suburban land in Hangzhou has resulted in increased profits from land property which allowed for massive investment projects. It can also be argued that the movement of population from urban to rural and the decentralization that followed was desirable for Hangzhou, since it prevents an overcrowding of the city and improves the allocation of resources.

Negative Outcomes

Rising Cost

However, there are downsides to heavily depending on suburban land development for capital accumulation. One issue is the gap between land acquisitions costs and leasing prices, which has created tension between the local government and rural communities. Ordinary villagers and migrants are at a disadvantage when negotiating for a share of profits, because individuals with political power have stronger influence over land developments. Furthermore, the limited supply of residential land has increased property prices and caused commercial housing to be unaffordable for low-income urban residents and immigrants. Hangzhou being a major urban centre in China, attracts numerous migrants from the rural area of China. Yet, as the city began to develop in the last decade, especially during the post-G20 era, the cost for living and property has skyrocketed causing troubles for migrants who are struggling to afford rents.

Quality Control

The rapid expansion of Hangzhou has led to issues that worried local stakeholders. In terms of land development, one common topic discussed by local stakeholders is the quality of the development area resulting from fast paced construction. Worries spark as construction companies take on development projects and eagerly seek to complete the contract in a short time frame. Construction projects on a large number of plots developed in the past were not for sale, but rather for rental income or government sponsored construction projects. Therefore, the owners and contractors of these building projects often weigh construction speed and efficiency to maximize benefits with a smaller emphasis on the quality of construction. Stakeholders thus express concern over these common practices and worry about the risks in light of unforeseen circumstances. The Sci-Tech City Dream town in Hangzhou is an example, an area that was newly developed in the last decade with support from the government. This entire area is dedicated to the tech industry and largely accommodates the Alibaba group which is based in Hangzhou. The town was built in 100 days from scratch due to efficiency and funding but local stakeholders dear that “there will be some problems exploding in the future, so we may have two different results: one good – a brand new city – and one bad – the quality of the construction or maybe the spiritual”.

Demolition of Farmland and Villages

Local opposition to urban development also includes concerns over the loss of farm lands and historic buildings contributing to Hangzhou’s cultural and historical reputation. According to satellite data, over 850 kilometer square of rural area was transformed into urban area in the last two decades. Due to the success of the Alibaba group, the government of Hangzhou decided to support the city becoming more tech and ecommerce centric, dedicating infrastructure and future developments to the sector. The Sci-Tech City in Hangzhou for example, used to be vast farmlands that produced food. As urban expansion continues, local farmers were forced to give up their farmlands for the development of urban areas. Though they were compensated, many chose to move away from the developing city. Thus, some local stakeholders express worries over the loss of farmland resulting in the loss of agriculture in Hangzhou and a possible increase in production of GMO rice and imported food. The urban development also resulted in the demolition of numerous villages within the city, which contains important cultural and historical importance to the people. Though the government emphasizes on protecting cultural relics while developing the villages, local interviews indicate that in some cases this is untrue.

Lessons Learned

Lessons learned from development in Hangzhou can be applied and provide insight to other urban areas in the Global South. Firstly, cities need to have a functioning urban planning policy to ensure that the layout of buildings enhances accessibility to primary social amenity services and utilities. This is not only a solid foundation for the development of the city itself but also guarantees social well being and positive health outcomes for city residents and visitors. Secondly, global events can be vital stimulators of land and housing development, particularly in developing cities. When such events are expected to occur, people may buy land near the venue and develop them in anticipation of a short-term gain as far as accommodation and recreation services are concerned. Nevertheless, the events lead to soaring land rates, land acquisition, and development as a preserve of the rich. Hence, in this regard, city authorities should play a regulatory role in ensuring the affordability of land rates for development.

Moreover, the growth of cities is dependent on active participation between residents and authorities. Active participation serves to create awareness to potential investors regarding cities' land-use policy. Furthermore, it helps authorities to adjust their policies following pieces of advice from city residents. Cities in the Global South face many challenges in land and housing development, such as housing deficit leading to the sprawling of slums or underutilized land. Therefore, Global South cities can eradicate this challenge by incorporating a myriad of options or strategies. Cities can promote the development of rental housing or construct affordable housing to absorb a population without a housing structure or a poor housing structure.

Reference List

This urbanization resource was created by Course:GEOG352.