From welfarism to entrepreneurialism: Impacts of the “shanty-area renovation” scheme on housing prices in China

Abstract

Urban renewal is emerging around the world as a tool for spurring economic growth and social regeneration. Over the past decade, the Chinese government has rolled out a nationwide “Shanty-area Renovation” (SAR) scheme which has been characterized as strong central state intervention and local state entrepreneurism. In order to facilitate the process of SAR, the central state has adopted financial and political tools to encourage local governments to be committed to the SAR scheme. With a change in state strategy, the goal of SAR transferred from a welfare-oriented redevelopment program in the beginning to a property-led oriented redevelopment program for the purpose of de-inventorizing the real estate market, resulting in rocketing housing prices. This study adopts a fixed-effect panel regression model to explain the influencing mechanism of SAR on housing price fluctuations across the country. This research concludes that the policy design of SAR could be directed towards urban regeneration beyond property-led development, and the social, economic and environmental objectives should be integrated into the SAR process.