Suburbanization is an Irresistible Trend / Sheng Hong

If urbanization is regarded as a market process, the town is an organism. This organic body grows and changes over time. Suburbanization is a new stage in the process of urban growth and change. Urban population transfers and spreads from the center to the suburbs. This phenomenon has already appeared in many countries with leading economic development. In the United States, for example, suburbanization began in 1880. The indicator is that the proportion of people living in urban centers continues to decline. According to Mills, the proportion of people living within three miles of downtown in the four major urban areas of the United States (Baltimore, Milwaukee, Philadelphia, and Rochester) fell from 88 percent in 1880 to 24 percent in 1963 (O’Sullivan, P. 251). Throughout the United States, the number of residents and employed people in downtown areas decreased from 57 and 70 percentage points in the 1950s to 37 and 45 percentage points in the 1990s (Peter Mieszkowski and Edwin S. Mills, 1993).

From the distribution of urban population density, suburbanization makes the population density gradient of metropolitan area gentler. The so-called “population density gradient” refers to the percentage of population density change per mile from the city center to the outside. The larger the population density gradient is, the steeper the population density distribution is, and the smaller it is, the gentler it is. According to O’Sullivan’s Urban Economics, from 1801 to 1961, London’s density gradient decreased from 126% to 34%; Paris’s density gradient decreased from 235% in 1817 to 34% in 1946; and the gradient density of the four major urban areas in the United States decreased from 122% in 1880 to 31% in 1963 (O’Sullivan, P. 251). The smaller the gradient of population density means that the spatial scope of metropolis becomes larger. The population density gradient is slowed down by Suburbanization as shown in the figure below.

Figure 1 Variation of suburbanization gradient

So, why is there suburbanization? This is due to changes in technical factors and utility functions. Due to the improvement of means of transportation, especially the invention and popularization of automobiles, the transportation cost has been greatly reduced, and the corresponding efficiency, that is, the moving speed has been greatly improved. In the early modern times, urbanization was mainly driven by industrialization. Because modern industry needs large-scale production, it needs large-scale transportation. The factory should be located in a place with convenient transportation, that is, close to the city center; it also needs the concentration of production workers, and because of the high transportation cost, workers need to live close to the factory. Later, due to the popularity of trucks, the cost of industrial transportation decreased. According to O’Sullivan, around 1920, trucks in the United States were half cheaper than wagons, but at least twice as fast as wagons (247). Businesses don’t need to be positioned close to the city center. The popularity of private cars allows people to choose to live far away from their work place. Furthermore, the development of expressways and light rail trains has expanded the scope of suburban areas. Finally, the development of the Internet and the change of communication technology have further reduced the cost of people’s communication, made people do not have to talk face to face, and also reduced the need to work in the city center. When the cost of transportation and communication is greatly reduced, people are obviously willing to live in farer places, which will inevitably lead to suburbanization.

The suburbanization of residence in turn drives the suburbanization of enterprises. In the suburbs, businesses can get labor and land at a lower cost. The suburbanization of industrial enterprises and their employees and residents has brought about the suburbanization of service industry. It turns out that due to the concentration of industrial enterprises and residents in the city center, the urban service industry is also concentrated in the city center. First, commerce, then finance, information services and entertainment industries need to cover as many people as possible, so they are concentrated in the city center. Because of the suburbanization of enterprises and residents, the retail industry following the crowd moves to suburb. The popularity of private cars has also changed the location of large supermarkets or shopping malls to the suburbs. Then come the suburbanization of office buildings. For example, the proportion of office buildings in the central business district in Houston, USA, dropped from 52% in 1969 to 23% in 1989 (O’Sullivan, 2003, P. 264). On the whole, suburbanization is characterized by the transfer of population, manufacturing, wholesale and retail services from the city center to the suburbs. The suburbanization of the United States is shown in the figure below.

Figure 2  The proportion of the population in the suburbs of the United States in 1948-1990

Source: O’Sullivan, 2003, P. 246.

We naturally wonder whether the process of suburbanization has also appeared in Chinese mainland. The answer is yes. In fact, shortly after the reform and opening up, China began the suburbanization of industrial enterprises. We still remember that in the 1980s, there were industrial enterprises within the current second ring road of Beijing. When I was preparing my master’s thesis in 1985, I went to Beijing internal combustion engine factory to investigate and study it. It is located within the current second ring road. Going out the second ring road is farmland. Later, Beijing, like many other cities, experienced a process of “retreat from two to three” or “retreat from three to four” in the 1980s and 1990s. In other words, in the central area of the city, the secondary industry should be reduced and the tertiary industry should be increased. Industrial enterprises should retreat from the second ring road to the Third Ring Road and beyond the Fourth Ring Road. Today, there are few industrial enterprises within or outside the Fifth Ring Road. In addition, due to the restrictions on land use during the period of planned economy, the housing supply was too small, and a large number of residents lived in crowded and difficult conditions. After the reform and opening up, many cities developed up residential areas, which is another major factor of suburbanization. According to data provided by Zhang Wenxin, during the 1980s and 1990s, the population in the central areas of many large cities in China continued to decline, while the population in the suburbs almost doubled. See the table below.

Table 1  Suburbanization of some cities in China (1982-2000)             units:%


With the suburbanization of industrial enterprises, it is the suburbanization of the employed population. In Chinese mainland, the process is not obvious to local residents. Because in the process of industrialization of reform and opening up, a large number of foreign workers are mainly employed in cities. In Beijing, in addition to migrant workers, there are also a large number of university graduates who want to develop in Beijing, which is called “Beipiao”. Most of them live in places that are regarded as suburbs, such as Chaoyang District, the edge of Haidian District, Changping District, Tongzhou District and Daxing District. The famous Tangjialing is a village in the city of Haidian District. Until it was demolished, many young people working in Zhongguancun High-tech Park in Haidian District lived there. From the big concept of urban development, these areas are part of the metropolis, namely “suburbs”. For example, in Shenzhen, about half of the people live in the so-called “villages in the city” or “houses with small property rights”. In most Chinese mainland cities, the population of “city village” accounts for about 30%~50% of the total population. Due to the suburbanization of employment, the population in the central urban area of Shanghai decreased by 1.9% and the population density decreased by 5% from 1993 to 2006, while those of the suburbs increased by 6% and 6.2% respectively. In the 10 years since 2005, the number of migrants in Beijing has more than doubled, from 3.57 million to 8.23 million.

Figure 3 Population and population density changes in central and suburban areas of Shanghai (1993~2006)

Another wave of suburbanization is the suburbanization of residents of the city. It was in the early twenty-first Century that private cars began to spread in mainland China. The number of  cars per 100 households in Beijing increased from 3 in 2001 to 50 in 2017. As private cars expand the residents’ activity radius and vision, people turn their eyes to the suburbs and start to buy houses in the suburbs. There are also several groups of people in this wave of suburbanization. One is the young people who have just started their career. They can’t afford the houses in the city, but they can afford the houses with small property rights in the suburbs; the other is the middle-aged people who still have jobs in the city. They choose to pay attentions to both the distance and the spacious space. They can afford to buy (rent), while  generally, the distance is within one-hour drive or 40 kilometers, such as Xiaotangshan in Beijing. Another group is retired people, there are also some freelancers or non shift professionals, who can live farther away, such as the famous Xiangtang cultural village in Beijing is 50 kilometers away from the city center, has been built and sold since 2000. There are also some people who come to Beijing from other places. They may have relatives in Beijing. If they want to live in Beijing for a long time, they will buy cheaper houses in the suburbs. The more recent wave of suburbanization is a response to the Internet revolution. Some people choose to live in villages or small towns far away from the city, but with pleasant environment. In the north of Changping District, Huairou District, Miyun District, Yanqing County of Beijing and Laishui County of Hebei Province, there are also suburban communities appearing and developing.

Figure 4 Number of cars per 100 households in Beijing (2001-2017)

Data source: website of Beijing Municipal Bureau of statistics.

Like other countries, suburbanization in Chinese mainland is also an adjustment made by the market and the layout of enterprises and settlements after the revolution of transportation and communication tools. Beijing is basically a huge city with a single center, and its population density will decrease with the distance from the city center. The figure below shows the population density of each district in Beijing in 2000 from large to small. From Xicheng District to Huairou District, the population density gradually decreased from 30367 people / km2 to 184 people / km2. By 2017, due to the suburbanization, some changes have taken place, and the population density in some areas is significantly higher than that in 2000. In the figure below, the red line is higher than the blue line. Such as Haidian, Chaoyang, Fengtai and other districts, which can be seen as the expansion of central cities in the process of urbanization. Moreover, the population density of Changping and Daxing increased to 1238 and 1485 per square kilometer respectively. If the standard of urbanization is more than 1000 people per square kilometer, Changping and Daxing can be regarded as cities. Taking the average distance between Changping and the city center as the city radius, the population density gradient of Beijing decreased from 119% in 2000 to 113% in 2017. This is suburbanization. However, compared with the 34% gradient already achieved by Western metropolises such as London and Paris, Beijing has great potential for suburbanization.

Figure 5  Population density of each district (2000,2017)

Data source: website of Beijing Municipal Bureau of statistics.

As the land price changes with the per capita land (the reciprocal of population density), and the closer it is to the city center, the more it will benefit from the higher market demand brought by the higher population density. Therefore, the land price will decrease with the increase of the distance from the city center and the decrease of population density. The figure below shows the land price of each district from high to low in 2007 and the land price of each district in 2018 on this basis. On the whole, land prices have declined from the city center to the outer suburbs. When the automobile began to popularize and the transportation cost dropped sharply, many residents or enterprises had the power to transfer from the city center to the suburbs. In the case of low population density and obviously low land price in the suburbs, it is worth working and living in a far away place due to the reduced travel cost of cars. After more than ten years of suburbanization, although the price of land in the suburbs has risen rapidly, the price of land in the city has risen faster, as shown in the figure below. From 2007 to 2014, the land price of Dongcheng or Xicheng increased 35 times, while that of Haidian, Chaoyang and Changping increased only 10, 12 and 13 times from 2007 to 2018. This is determined by the particularity of Beijing, so the process of suburbanization has not been completed, but there is still a long way to go.

Figure 6  Land price in Beijing (2007, 2018)

Data source: the land price in 2007 was from the land auction transaction price on the website of the then land and Resources Bureau; the land price in 2018 was from the district average value of land listing transaction price on the website of Beijing natural resources and Planning Commission. Among them, due to the lack of data in 2018, the land price in Xicheng District was in 2014, while that in Haidian District was in 2017.

When people choose the place to live, the transportation cost and the house price are two factors that need to be weighed. For places close to the city center, the living place is close to the work place, and the travel cost is low, but the population density is high, the land price is correspondingly high, and the house price is naturally high; if you choose to buy a house in the suburbs, the house price will be much cheaper, but it is far away from the work place. People can choose between a longer distance to work and a cheaper house price (and larger area), and a shorter distance to work and a more expensive house price (and smaller area). Urban economics has a simple formula for Suburbanization (O’Sullivan, 2003, P. 200). That is to say, if someone is living in point a and wants to buy a house at point B, which is farther away from the city center, he calculates as follows:

Unit price of transportation cost (per kilometer) × the number of kilometers increased from point B relative from point A to the city center =

The unit price (yuan / m2) reduced of point B relative to point A × the residential area (point B)

In a word, the increase in transportation costs due to relocation is equal to the saving of housing costs. Under the same conditions, this formula reaches an equilibrium, but when the “unit price of transportation cost” becomes cheaper, some people are willing to choose suburbanization. According to my experience, in Beijing, from the urban residence to the suburban residence, the driving time is about 1 / 3 of that of taking the bus, and it is more comfortable. After the popularity of private cars, the transportation cost will be reduced by 2 / 3, so you can live farther away from the city center without changing the total transportation cost. As the house price is also cheaper, you can choose a larger house.

Therefore, in the early years of the 21st century, with the popularity of private cars, the trend of suburbanization continued to strengthen. In Beijing’s core urban area, the population proportion of Dongcheng District and Xicheng District (including Chongwen District and Xuanwu District in the past) decreased from 20.8 percentage points in 2000 to 13.3 percentage points in 2017; the proportion of population in Chaoyang District, formerly a suburb and now an urban area, increased from 14.8 percentage points in 2000 to 17.6 percentage in 2017, Haidian District increased from 15.3 percentage points to 16.9 percentage points, Changping District increased from 3.9 percentage points to 7.8 percentage points, and Daxing district increased from 4.6 percentage points to 7.1 percentage points. In absolute terms, the population of Changping District increased from 495000 in 2000 to 1670000 in 2017, and Daxing district increased from 589000 to 1530000. This is an obvious trend of suburbanization. Among them, the suburbanization of Chaoyang District and Haidian District is mainly the suburbanization of the employed population, mainly by a large number of foreign workers; the suburbanization of Changping District and Daxing District is mainly the suburbanization of local residents, especially Changping, which is the most significant, and Daxing is also mixed with two kinds of suburbanization.

Figure 7 Changes in the proportion of population in different districts of Beijing (2000-2017)

Data source: website of Beijing Municipal Bureau of statistics.

As the trend of suburbanization is under the guidance of market mechanism, it is the optimization process of land resource allocation, which will inevitably bring economic development. From 2005 to 2017, Beijing’s GDP increased by 292%, while Chaoyang District, Haidian District, Changping District and Daxing district all grew by more than 300%, which were 315%, 312%, 318% and 309% respectively, with an average annual growth of more than 12.5%. Shunyi District and Tongzhou District are the two areas where the growth rate exceeds them, for there are other factors at work. For example, Shunyi district is in the capital airport economic circle, while Tongzhou District is the relocation site of Beijing municipal government.

Figure 8 Economic growth in Beijing (2005-2017)

Data source: website of Beijing Municipal Bureau of statistics.

From the micro perspective, we can better understand the benefits of suburbanization. In Beijing, the popularity of cars first increases the number of city residents who spend their holidays in the suburbs on weekends. Since the middle and late 2010’s, the traffic to and from the suburbs of Beijing every weekend will cause congestion and even traffic paralysis. As people’s wealth continues to increase, some of them not only have a main house that is fully satisfied in size and quality, but also can buy so-called “second homes” in the suburbs for weekend holidays. People who used to drive to the suburbs on weekends and spend the night in resorts or farmhouses now want to spend weekend nights in their own houses in the suburbs. In 2006, I estimated that the unit price of a house (including courtyard) in Huairou District of Beijing  was 1 / 4 of that in the downtown (within the Fifth Ring Road); today, the difference seems to be even larger, even about 1 / 6. At that time, the middle class, who could afford to buy a car, could also afford to buy a cheaper country house. With the growth of people’s age, the continuous improvement of transportation, and the continuous improvement of suburban infrastructure, they will gradually increase the residence time in the suburbs, and finally mainly live in the suburbs. It is said that in the new village of Xiangtang culture, one third of the people are the only residence. Over time, this proportion will change, and the proportion of people living in the suburbs will increase.

In order to attract urban residents to buy, the developers cooperate with local villages to design beautiful houses and harmonious communities with the environment, which greatly changes the ugly situation of rural houses in China. Courtyard life gives people space to design and create their own living environment. People can plant trees, flowers or vegetables according to their own aesthetic taste, and design the appearance and structure of their houses and courtyards. Opening the door every day is a pleasant garden. They can do what they can and don’t need to do. For example, they want to cut branches and water, they can do it without any harm. This is a way of life that relaxes the body and mind, works moderately, and enjoys a good life. It is particularly attractive to the retired and the sick. The tradition of farming and reading and the culture of seclusion in China also bring poetic flavor to the courtyard life in the suburbs, and are favored by artists, cultural people or intellectuals. As each family has its own aesthetic personality, these suburban courtyards have their own unique styles, some exquisite, some extensive, some carved, some natural, forming a diversified aesthetic structure, which together constitute the natural beauty and cultural beauty of the community. Compared with the urban community, which is designed by developers without residents’ participation, it is much more beautiful and pleasant. This has improved the quality of life of urban residents who have moved to the suburbs.

Since ancient times, Chinese literati have advocated nature. Wen Zhenting, the author of Chang Wu Zhi, said, “To resident among mountains and rivers is the first choice, followed by the village and the suburb.” The closer the house is to nature, the better. We can often see the courtyard among mountains in the literati paintings. Artists, writers, scholars and professional intellectuals account for a large proportion of the people who buy houses in the suburbs of Beijing. The larger space of suburban houses can hold their books and put down larger desks and worktables. Rural environment, natural and quiet, can not only inspire inspiration, but also reduce interference. It is an ideal space for cultural and artistic creation and theoretical thinking. As a result, a large number of artists and writers gathered in the suburbs of Beijing. Such as Songzhuang painter village, Wayao writer village, Shangyuan Artist Village, suojiazhuang art camp, shuipo Art District, etc. This will also stimulate the interaction and innovation of the group. In time, there will be art schools, literary traditions, or theoretical schools that rewrite the world cultural history in the suburbs of Beijing. In fact, there have been two world-class writers in the mountainous suburbs of Beijing. One is Cao Xueqin, who created a dream of Red Mansions in Huangye village, Xishan. The other is French Saint-John Perse, who wrote a long poem “Anabase” in the Taoyuan temple of the Guanjialing in the west mountain. He later won the Nobel Prize for literature in 1960.

When city dwellers go to the suburbs to buy houses, they bring their accumulated wealth and daily needs to the suburbs, which increases the income and wealth of the local residents in the suburbs, and creates a permanent demand market for the service industry. For example, the investment amount of urban residents in Xiangtang cultural new village is about 8 billion yuan, and that in Wayao villa area is about 3 billion yuan. This is a huge investment for a village from 2000 to 2010. The annual property fee of Xiangtang is about 4000 yuan, and the annual property fee of 3800 households is about 15.2 million yuan; for Wayao, each household is about 4000 yuan, and 1800 households also pay about 7.2 million yuan per year. In my article “why Xiangtang can’t be dismantled”, I estimated that the service industry demand brought by Xiangtang residents alone is about 170 million yuan per year, creating 2680 jobs; according to the same parameters, if the number of Wayao residents is 5000, the demand for service industry is as high as 85 million yuan per year. In general, Beijing’s “new urban development zones”, including Changping, Shunyi, Tongzhou, Daxing and Fangshan, grew by 48%, 162%, 233%, 249% and 250%, respectively, of permanent population, GDP, retail sales, construction industry and fixed assets investment from 2008 to 2016 (Beijing Municipal Bureau of statistics, 2017). Due to the suburbanization of urban population, the economy grows at a faster speed.

Figure 9 Population growth and economic development of “new urban development zone” in Beijing (2008-2016)

Data source: website of Beijing Municipal Bureau of statistics.

Suburbanization not only brings local economic benefits, but also improves the environment. Most of Beijing’s suburbs are mountainous areas, and many suburban communities are built on barren hills, ditches, and barren beaches. Most of these rural houses have courtyards or gardens. And this is the main reason for these owners to buy. They grow all kinds of plants in their courtyards or gardens. In order to achieve this goal, many people will make great efforts to transform the land. For example, I was in the Old Beijing Courtyard in Water Great Wall, I planed out the underground stones first and then put soil on land. In the first few years, every time I went hiking in the wild, I brought back a bag of soil. Some of my neighbors even buy soil for improving land. We also buy fertilizer to improve soil fertility. This is also true of many communities such as Wayao and Aoshan International. Some ecological experts, such as Professor Yang Xiaojin, carefully studied the local climate, environment, soil and water, and through improvement, turned the original barren mountain into a green garden. He said that he planted dozens of species of about 101 trees in his garden (yiwa library, 2020); I also counted about 50 plant species in my more-than-100-square-meter courtyard. Outside the courtyard or garden, there are also a lot of plants growing in the community. If in the mountains, even for the sake of beauty, people will plant trees in front of their houses and behind their houses; their homes will be shaded in green. Therefore, the suburbanization and the construction of villas or quadrangles in the countryside do not destroy, but improve the ecological environment of the suburbs.

The more important achievement of suburbanization is that it has attracted a lot of human resources, which are more valuable than funds. For example, in Songzhuang Art District, Xiangtang culture new village, Wayao writer village, Shangyuan Artist Village, Suojia Village Art Camp, and so on, in fact, there are many university professors, writers, poets, painters, calligraphers, actors, doctors, scientists, and humanities scholars in any residential area on the outskirts of the city. As creative people with rich knowledge structure, they themslves are worth tens or hundreds of times as their economic wealth. Every brain is a creative center. For the remote countryside, this was unimaginable in the past. Nowadays, people often complain about brain drain in rural areas, and suburbanization has brought them a lot of talents, even excellent talents. Many villages regard them as village sages. For example, Xiangtang cultural village once fully exploited the value of this group and developed its cultural industry; Wayao Village also held a summit with the help of writers’ village, with the participation of more than 20 famous writers such as Mo Yan. It is said that Wayao has attracted more than 1000 intellectuals. Even if some villages did not take the initiative to consult these cultural people, the community formed by their culture and knowledge has also brought local demonstration.

However, this suburbanization is not plain sailing. When we say that urban residents refer to the market price and make their own economic calculation to buy suburban houses, they will actually be affected by the institutional environment. This is the land system at that time. The land management law of 1986 allows urban residents to build houses in rural areas, and allows rural residents to sell or rent houses, but only restricts their application for new homestead. In this context, until the end of the 20th century, there were no serious institutional barriers to suburbanization. However, at that time, the Ministry of land and resources had a strong impulse to expand its power, naturally inclined to the planned economy model. To emphasize the so-called “land planning” is to emphasize its own power. It uses every opportunity to sell its theory. A specious theory is the “1.8 billion mu arable land red line”, that is, in order to ensure China’s food security, the government must restrict the transformation of rural land into urban land, so as to limit the use of rural collective land. However, since senior government officials have never had the overall vision of suburbanization, from the perspective of Beijing, urbanization seems to be a process of constantly using buildings to occupy farmland. This intuitive experience makes people feel that if the building of houses in rural areas is not artificially prevented, urban expansion will continue, and China’s cultivated land will be reduced to the extent that food can not be self-sufficient. This “theory” eventually misled the supreme leader at that time.

This led to the revision of the land management law in 1998. Two of the revised articles have caused serious obstacles to suburbanization. One is article 63, “the ownership of land collectively owned by farmers shall not be transferred or leased for non-agricultural construction”. This is tantamount to prohibiting urban residents from buying or renting houses on rural collective land. One is Article 43, which states that “construction land shall apply for the use of state-owned land”, which in principle prohibits the construction on rural collective land. Of course, these two amendments have obvious unconstitutional nature and jurisprudential problems. Although rural land has experienced collectivization and is described as rural collective land by the constitution, it belongs to rural residents and is stipulated as complete ownership by Article 10 of the constitution, including the right of possession, right of use, right of income and right of transfer. Therefore, rural residents have the right to decide what to do on their land. Restrictions on the right to use and transfer rural collective land obviously infringe on the ownership of rural collective land. However, the addition of a proviso to Article 43 alleviates such a mistake, saying that “township enterprises Exception “. Because township enterprises can also engage in “real estate”, this “exception” can be used to provide legal basis for rural collective development of real estate.

If you think about it carefully, there are serious logical problems in the “red line theory of 1.8 billion mu of cultivated land”. Because the main difference between “urban” and “rural” is that the population density of the former is much greater than that of the latter. When the city expands, it will absorb the rural population with its high density. From the overall point of view of a country, the population from low-density areas to high-density areas will save land. The market system will also automatically limit the size of cities. As the distance from the city center increases, the population density will decrease and the trade dividend will decrease until there is a point where the benefits of urban and agricultural uses are equal, which is the boundary between the city and the countryside. Beyond the borders of cities, there is no stronger incentive for people to turn farmland into towns. This will be an iron law, because the total population is limited; it is like the law of diminishing marginal utility in economics. Just as the owner of a buffet shop doesn’t have to worry about losing money, because people’s stomachs are limited. I used to calculate a simple account, assuming that the average population density of urban area is 5000 people, it only takes 2.9% of the land area to put the population of the whole country into the city. Later, the govenment also admitted that China actually has 2.03 billion mu of cultivated land, which greatly weakened the “1.8 billion mu theory”. However, although few people say “1.8 billion mu” today, the impulse of planned economy still exists.

In 2010, the Ministry of land and resources proposed “cleaning up and renovating the houses with small property rights”. The so-called “small property right house” refers to the house built on the collective land. This is not a legal concept, but a common name. Its intention is to negate “property rights” with the word “small”. It is based on Article 63 and Article 43 of the Land Management Law of 1998. In 2012, the Beijing Municipal Bureau of land and resources released a list of 108 “small property rights houses to be cleared up”, which is said to be supported by the court’s judgment. But I haven’t found a verdict like this. In this list, Changping District is the most, and the rest includes Fangshan District, Huairou District and other suburban areas. Last year and this year, some residential areas were forcibly demolished or threatened to be demolished, such as Banshan Yunju, Fairy Tale Hill House, Shanzuo Courtyard, Russian-style Garden, Aoshan International, Yayuan, etc., which are on the list. This is obviously an important step in preventing suburbanization. However, in the decision on administrative punishment of land and resources of Wayao Village in 2012, the reasons put forward are that the village has built houses on “conditional construction land”, which violates the first paragraph of Article 43 of the land management law, and construction land should “apply for the use of state-owned land”, but does not mention the “proviso”; and Article 44, that is, “If the conversion of agricultural land to construction land is involved, the examination and approval procedures for the conversion shall be handled,” it has pointed out that Wayao Village was building houses on “conditional construction land”, which is in contradiction with itself.

The Ministry of land and resources cannot resist the general trend of market economy. “Small property right houses” are blooming everywhere. By 2018, it was about 7.3 billion square meters, accounting for 24% of the total urban housing area (Zhu Zhenxin and Yang Qinqin, 2018), providing cheap housing for hundreds of millions of migrant workers, which is one of the important conditions for China’s economic miracle. In the same way, the construction and development of suburbanized communities also bring economic development benefits and are welcomed by suburban residents. Since 1999, Zhang Wenshan, Secretary of the Party branch of Xiangtang village, took the lead in exploring the use of collective land to develop suburban communities. Taking villages as the unit, flexible measures were taken to build and sell houses, which were widely followed. There is more support from the local government. Xiangtang model is not only supported by the town government, but also by Changping District government and Beijing municipal government. Changping District has also put forward “policies to promote the development of cultural industry”, supporting and forming “eight major cultural and creative gathering areas”, including Wayao writers’ village and Shangyuan Artist Village, which it later referred to as “illegal construction” (Beijing business daily, October 22, 2010). The Ministry of land appeared hard to stop the tendency. The process of reform and opening up has led many people to believe that the government’s control over land is only a remnant of the planned economy. With the further reform and opening up, it will gradually be abandoned, just like those abandoned systems in the past.

Therefore, although the “small property right house” is judged as “illegal” by the Ministry of land and resources, there are still disputes in the theoretical circle and the government. In addition to the obvious unconstitutional violation of the two articles, Article 63 of the Land Management Law of 1998 said that “farmers’ collective land” should not be used for non-agricultural construction, which seems to be a mistake of “rural collective agricultural land”, because there are still “rural collective construction land” There are also a large number of barren mountains, ditches and beaches. At that time, there were billions of square meters of “small property rights houses”, which were helpful to the economic development and housing conditions of residents. It was a malicious law that ignored the facts and turned a large number of “small property rights houses” into illegal, which were not sufficient reasons for forced demolition. Moreover, the administrative departments of then government still respect the Constitution and the law. Even if they want to demolish them, they must follow the due process of law, and reasonably compensate the owners who are bona fide third parties. Therefore, although there are some forced evictions, there was no demolishing movement. As a result, most of houses have survived without being forcibly demolished for seven or eight years. By 2020, the new “Land Management Law” comes into effect. The original 43 (1) “construction land should apply for state-owned land”, and the original 63 “rural collective land shall not be sold and leased for non-agricultural construction” are deleted, and Beijing land and Resources Bureau loses the legal basis for “rectifying small property rights houses”.

In 2019, the central administrative department proposed to “rectify the illegal villas”, although it also made strict restrictions on the “illegal villas”, that is, “great damage to the ecological environment”, and “procedural violations”, it is also the villas built after 2004; and it emphasizes that “in accordance with the law and regulations”, “protect the legitimate rights and interests of owners” and “protect their litigation rights”. However, due to some political factors, the local government, in order to carry out the instructions of the superior, ignored the protection of the Constitution and the law for citizens’ housing rights and property rights, did not follow the due process of law, and illegally used the means of forced demolition, which made the illegal demolition a vicious movement. With the so-called “rectification of illegal villas”, the local government of Beijing took out the list of “houses with small property rights” published in 2012 and decided by the court, and actually carried out illegal demolition. In fact, at this time, the new land management law, which was implemented in 2020, has deleted the legal basis of the ruling, and according to the legislative law, “if the new provisions are inconsistent with the old provisions, the new provisions shall apply.” (92 Article) The court’s ruling of 8 years ago is invalid. However, the court of Changping District seems to ignore the revision of the law. The above-mentioned communities, such as Banshan Yunju, Fairy tale Hill House and Aoshan International, were still demolished, and the villas in Wayao, such as Shanzuo Courtyard and Russian style Garden, are also doomed. However, due to the invalidity of the law on which the judgment is based, it is illegal for it to send judicial police to execute it.

In order to strengthen the so-called “rectification of illegal villas”, the Beijing municipal government has also proposed “Beijing special rectification of illegal land occupation and illegal construction of villas in shallow mountain areas” (China Youth Daily, 2020). But looking through the Internet, it seems that there is no theoretical support for the so-called “rectification of illegal villas” in “shallow mountain areas”. Take a look at the map, Beijing is a place surrounded by mountains in the East, North and West. This is what Beijing officials call “shallow mountain area”, with an altitude of 100-300 meters. This is the development direction of Beijing’s suburbanization, and it is also the suitable terrain for building villas. Some experts said, “Villas built on flat land are not as good as hillsides.” “Sloping fields are usually located in shallow mountain areas.” (Li Huabiao, 2014, P. 11) the slope between 3% and 10% is the most suitable for villa construction (P. 45). On the one hand, “sloping land is mostly” abandoned “land for urban construction or agricultural and forestry purposes (P. 11) for example, in the shallow mountain area of Beijing, a large amount of hillside land and river beach land are not suitable for farming, but can be used to build houses. Second, the construction of villas on the hillside has the characteristics of “surrounded by green mountains” and “the uniqueness of natural landform” (page 11), and the buildings are also uneven due to the slope. Thirdly, as a kind of low-density villa, it is a kind of residential form with harmonious coexistence of human settlements and nature, and compatible with the level of population density in suburban areas. It is a perfect choice to build a villa here. Therefore, the Beijing Municipal Government’s “rectification of villas in shallow mountain areas” has much less legal basis and economic rationality than the original “cleaning up and renovating houses with small property rights” proposed by the Ministry of land and resources.

The Beijing municipal government has repeatedly used various excuses to demolish villas in Changping and other places, which reflects the positive confrontation between planned economy and market economy in land resource allocation. In the logic of planned economy, “city” is the city, “rural” is the countryside; “city” can only build houses, “rural” can only farm. The boundaries between urban and rural areas cannot be changed without the permission of the planning authority. However, the logic of market economy holds that “city” and “countryside” are formed by people’s reaction to market prices. People tend to move to places more favorable to them. With economic development and technological changes, the boundary between “urban” and “rural” will change with time. In the view of those who emphasize the planning power of the administrative departments of the government, the change of the urban-rural boundary along with the market signal violates their departmental power. Therefore, it is necessary to emphasize that the planning power is superior to the market decision-making, and have the right to “correct” it compulsorily. Those in favor of the market economy believe that the improper elevation of the so-called “planning power” and the abuse of public power to forcibly demolish the suburban communities determined by the market are not only a serious violation of the constitutional principles of the “market economy”, but also the destruction of the wealth and prosperity generated by the market by their own ignorance.

Facts have proved that the “land planning” since the reform and opening up has lagged behind the actual development of cities and towns. The “planned” cities are usually only 2 / 3 or 1 / 2 of the actual development cities (such as in Shenzhen). In fact, the demand gap can only be made up by “small property right houses” and “villages in cities”, then the miracle of China can only be achieved. This fact not only does not let the stubborn adherents of “land planning” reflect on what is wrong, nor is it punished. On the contrary, while enjoying the benefits of market-oriented urbanization, they insist that the market is wrong and should use its own wrong planning to “correct” the effective allocation of the market. Many years ago, I saw the chapter “suburbanization” in urban economics, and thought it was a common sense. But when I would like to write this research on “suburbanization”, I found that there was not a book in the name of “suburbanization” on the book sales platform, and some “suburban” articles could be found in “Baidu academic”, but most of them were researches more than ten years ago, almost none in recent years. When the administrative departments, because of their own motivation to fight for power, because of their lack of observation and understanding of the general trend of urbanization, and out of the artificial delimitation of the nature of land, they think that the rural land should be used for agriculture instead of residential construction. They not only do not have the concept of suburbanization, but also through the government’s control and policy orientation of scientific research funds, which makes the academic circles lack of the exploration of suburbanization. The lack of the concept of suburbanization makes the “planning” deviate from the optimal allocation of land resources determined by the market.

It is impossible for the administrative departments of the government to make effective planning for the allocation of land resources to material assets, and it is also impossible to understand the allocation of human resources, cultural resources and spiritual resources brought about by the suburbanization, let alone planning. The most valuable part of human beings is the brain. The magic of the brain is that it can give people unexpected surprise, that is, the innovation of thought and culture. Anything that can be foreseen in advance is not called “innovation”. Therefore, any “planning” for talent development, cultural development or even spiritual development, any government “project” to “create” artists, writers and scientists “masters” is a conceited idea. Remember Hayek said that people don’t know the loss caused by their losing liberty. This is because the creativity that freedom brings is immeasurable. Therefore, through the so-called “rectification of houses with small property rights”, “rectification of illegal villas” and “special rectification of villas in shallow mountain areas”, they subverted the foundation of freedom by infringing on citizens’ housing rights. How many are there potential Cao Xueqin and Saint-John Perse strangled, and how many are there future Cezanne, Van Gogh and Gauguin eliminated, we don’t know.

Compared with “merging villages”, another kind of “urbanization”, we can understand the advantages of “suburbanization”. The difference between the two is voluntary and compulsory; one is made by individuals or families, the other is made by the government; the other is gradual, and the other is limited by time for political achievements. According to economics, a transaction agreed by both parties voluntarily is the most efficient one, while forced buying and selling is not only a moral problem, but also inefficient because of breaking the principle of voluntariness. The decision-making of an individual or family according to the market signal is a decision-making that fully considers their own needs and financial situation, so it is not a decision-making that damages itself; and it will not harm others when trading in accordance with the property rights system and market rules. The government makes decisions on the basis of a single administrative region and request a group of people to take the same action. However, the needs and financial status of individuals are very different, which makes it impossible to make collective decisions that satisfy all of us. If we want to act in a unified way, we will inevitably damage some people and take mandatory measures. Gradualness means not taking urbanization as a government task, respecting the wishes of the parties concerned, not issuing policies or orders, and letting individual or family contracts work one by one. The suburbanization in Britain, France and the United States cited in the previous literature has experienced more than a century, revealing the gradual nature of suburbanization.

China’s gradual reform over 30 years has proved that gradual progress is the fastest. Compared with the “shock therapy” in the former Soviet Union and Eastern Europe, China’s economic development can be called a “miracle”. The rapid economic growth brought about by the suburbanization of residents in Beijing and other places through breaking through the interference of the Ministry of land and resources also proves this point. On the contrary, the attempt to “accelerate” the urbanization process through the government order is actually helping grow of the shoots by pulling them upward. The movement of “merging villages” in Shandong Province is to build houses at the supposed concentration points of the government. However, in the rural areas far away from big cities and with inconvenient transportation, there is no market support for the construction of these concentration points, so the farmers concentrate in vain and still operate agriculture, which brings inconvenience. In addition to wasting a lot of resources to build houses, it also destroyed the farmers’ existing wealth by means of forced demolition. Some government departments demolish the old houses before the new houses are built, resulting in the displacement of farmers and the serious decline in the quality of life. When farmers are forced to be merged, illegal measures are taken to stop water, power and bus, and to harass and threaten farmers’ homes, which causes great damage to their health, and some elderly and weak patients aggravate their conditions (Huang Yuxin, 2020).

If it is a market-oriented suburbanization, because the market rule is consent, people can avoid external interference and coercion through “disagreement”, so as to avoid losses. The process of urbanization is from rural towns to big cities, and then from big cities to form suburbs. It is natural and efficient for large cities with high population density to spill over into the neighboring suburbs. Because the neighboring suburbs are the closest to big cities and the shortest distance. City dwellers will first move to the suburbs near the city and then move farer place. In addition to allowing the city dwellers to enjoy rural life without giving up the advantages of big cities, they can often go to the city center to enjoy financial, artistic or cultural services. If the market signal is not interfered with, people can make decisions based on the market signals without too much deviation, which will bring about the improvement of their own welfare. Any family will make a smooth transition between the old and new houses by themselves or through the market intermediary before deciding to move a new house. There will not be the situation that the old houses were destroyed and there were no new houses when the villages merged together in Shandong Province. Suburbanization will also make suburban farmers get more income by selling assets and providing services.

On the whole, “merging villages” and “rectifying illegal villas” (or houses with small property rights) are two manifestations of a problem. They all place government “planning” improperly above market decisions. They also failed to see that suburbanization was a major trend in a new stage of economic development, and they all carried out illegal forced demolition because they could not let the parties concerned accept. The simultaneous occurrence of these two events further proves that the so-called “planning” improperly promoted by the administrative department, under the condition officials are ignorant of the specific complex situations, cling to the outdated concepts, and are obsessed with the struggle for power by the departments, will greatly deviate from the more effective allocation of land resources proved by the market. But on the contrary, they think that the allocation determined by the market is wrong and abuse the police power and administrative resources suppress and confront it. Therefore, our criticism of the so-called “planning” not only means that it has not found the trend of suburbanization and brought it into the planning, but also said that the rigid form of the so-called “planning” cannot find the trend of suburbanization or the trend caused by other market mechanisms. The first thing we should do is to emphasize that suburbanization is a new stage of urbanization and an important form of China’s economic development in the future. We should also carry out institutional and legal reforms to ensure that the market plays a fundamental role in the allocation of land resources, so as to ensure the smooth development of suburbanization, and put “planning” where it should be.

Nobel laureate Lewis said that modern economic development has two pillars: industrialization and urbanization. The industrialization of China’s mainland is coming to an end. The first stage of urbanization, namely, the stage of population centralization, has already ended. The new stage of urbanization, namely, suburbanization is just unfolding. There is still a century to go. It will be a major strategic mistake if the government is obsessed with “planning first” and adheres to the road of anti-suburbanization. In fact, “suburbanization” as a problem is unique to China. This is precisely because the existing land management system actually has the problem of violating the Constitution and the law, restricting the rural residents who have full property rights to exercise the property rights and changing the land use, which makes it a problem because of the obstruction of “suburbanization”. Therefore, what we need to do is to return to the constitution, promote the land system reform that has been part of the new land management law, return the land ownership of rural residents, including homestead ownership, and let them decide the land use according to market signals. The government should only formulate urban planning and define the nature of the planning as a supplementary and reference arrangement for market decisions. On a larger scale, except it really involves major ecological issues, national defense issues, and water resources issues, and is necessary to conduct in-depth discussions by the legislature and  to set up regulations, the right of land allocation should be handed over to the market, that is, to individuals or families.


Beijing Business Daily, “Eight major cultural and creative industry gathering areas in Changping”, October 22, 2010.

Yiwa Library, “A rural dream of an ecologist”, July 14, 2020.

China Youth Daily, “Beijing will rectify illegal villas in shallow mountain areas”, January 12, 2020.

O’Sullivan, Urban Economics, CITIC press, 2003.

Huang Yuxin, “Who is in charge of” living in the same village “, Caixin, July 27, 2020.

Li Huabiao, Value Theory of Hillside Villa, China Construction Industry Press, 2014.

Sun Huaizhong, “Shanghai suburbanization and the future absorption of the concept of ‘new urbanism’,” Journal of Shanghai Vocational and Technical College of urban management “, No. 2, 2009.

Zhang Wenxin, “the current situation, problems and Countermeasures of population suburbanization in China’s big cities”, Population Journal, No. 3, 2003.

Zhu Zhenxin, Yang Qinqin, “estimation of China’s total housing: do we have excess housing?” , Chinese Style Real Estate Investment Manual, Volume 2, Rushi Financial Research Institute, October 24, 2018.

July 30, 2020 in Forget-talk Hill Study

Author: flourishflood

Economist, Confucianist

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