Making Housing Affordable in Fast-Growing Chinese Cities: A Shenzhen Perspective - INTI - International New Town Institute

Making Housing Affordable in Fast-Growing Chinese Cities: A Shenzhen Perspective
article by Haotian Lin

Like many other Chinese cities, Shenzhen is experiencing intense spatial transformation. Downgraded neighborhoods are replaced with luxury housing, shopping malls and offices. Such development might improve the competitiveness of the city, but ignores the affordability of the city for lower-income groups. The reliance on the market parties to develop affordable housing has not produced satisfying results. The ‘old’ Danwei housing, which is profusely present throughout the city, has a number of qualities that make it attractive for redevelopment. Might it solve the shortage of affordable housing for the young and creative class, and thereby contribute positively to the transformation of Shenzhen?

According to the 11th five-year plan (2006-2010), Shenzhen will shift from manufacturing industry to creative and knowledge-intensive industries. Human capital and technology innovation are to become the new generators for economy. Many young and highly educated graduates therefore come to Shenzhen to search their fortune. However, high house prices become the first barrier for them to settle in the city. Rocketing house prices have been with no doubt the most popular topic in recent years among Chinese citizens. This article illustrates the current housing problems in Shenzhen and introduces a new renewal model to improve the affordability of housing.

Housing price growth in major Chinese cities (source:

The failure of housing policy
The reform of the Chinese housing system started with the open door policy in the 1980s. Before the adoption of this policy, urban housing mainly consisted of public housing, which was a service provided by the state to the employees of state-owned enterprises and the government. However, nationwide housing reforms radically changed the housing ethic and shaped the current urban housing stock. The reform broke with the socialist idea of absolute equity and confirmed the efficiency and power of the market instead. Due to the great demand for housing, private developers tend to satisfy the more profitable demand first, i.e. the high-end housing. Therefore, many people cannot afford a house even though the housing supply keeps rising.

The construction fever of skyscrapers reflects the expectation of economic growth (Photo by author).

In 2008, the central government realized these problems and announced a new affordable housing system for low-income households by including more private investments and developers who could participate in the construction. As a part of this national project, the Shenzhen government planned to realize 210,000 affordable housing units in the period 2011-2015. However, only 58,000 units were finished by 2014 (Chen, 2014). It is not a surprise that such large-scale developments can hardly be accomplished under the pressure of land shortage.
And there exist more problems with building affordable housing. Firstly, many of these housing projects are located at the urban fringe where infrastructure still needs to be improved and where there are not many job opportunities. This means high costs on commuting, which can make the housing ‘unaffordable’. Secondly, housing in China is not only a necessity for the population, but has also become an engine of economic growth. When the public housing system came to an end, the private sector housing stock flourished and stimulated speculation. This has greatly increased the revenues of local governments, which focus on economic growth and only intend to meet the quantity assigned by the central government without considering the quality of affordable housing.

In China, urban housing used to be the state’s responsibility. The housing reform can be seen as an experiment by the socialistic state to tackle the urban housing problem by involving the private sector. Enough incentives for the private sector have been created, but less attention has been paid to social commitment. Over-marketization of the housing stock harms the interests of those who are unable to get decent housing in the free market. To balance affordability and economic prosperity, the public sector’s intervention in housing stock needs to be re-strengthened and improved.

A typical Danwei plan, influenced by the Soviet Union (Source:
Danwei housing in Luohu, Shenzhen.

Search for solution
A possible solution to the lack of affordable housing in China might be the redevelopment of the Danwei housing. Before the implementation of open door policy in China, everybody belonged to a Danwei (‘work unit’), which could be a state-owned enterprise or a department of government. A Danwei is more than a workplace; it acted as the first step of a multi-tiered hierarchy linking each individual with the central political infrastructure. Workers were bound to their work unit. Travel, marriage and having children needed permission from the Danwei, which was also responsible for providing welfare, including housing. In many Danwei housing neighbourhoods, a sense of identity formed based on neighbourhood and work unit (Hui, 2013).
The design of the Danwei was the Chinese socialist translation of Clarence Perry’s concept of the neighborhood unit. The territory of the Danwei housing neighborhood is defined by the Dayuan, the area surrounded by a wall, fence and green, to increase safety. A Dayuan usually contains some supplementary functions such as schools, shops and sport facilities. The great demand of urban housing and the socialist idea of absolute equity resulted in a homogeneous spatial layout. Furthermore, the Danweis have good connections to public services, commercial districts and transportation.

Spatial structure of three levels: city, dayuan (courtyard) and housing.

One of the main policies of the housing reform in the 1980s was the commercialization of public housing by selling them to the Danwei staff for a low price (Chen and Zhao, 2012). The public sector also retreated from the daily administration of the neighborhoods, which was handed over to the commercial property management.
The low quality and lack of maintenance has lead to the degradation of these old residential areas rather quickly. Informal development is now the main force that maintains and transforms these neighborhoods. For example, inhabitants convert the ground floor into stores and some public spaces are occupied for private use. Because of the cheap rent, many low-income people settle in. It has become a kind of affordable housing for social disadvantaged groups. Nevertheless, there is a risk of social-spatial segregation in these former public housing neighborhoods. If the low-income recipients keep moving in, the neighborhoods may be labeled as slums, which will do harm to residents’ access to the job market, transportation, education, healthcare, and safety.

Typical Danwei housing in Nanyuan, Shenzhen.

Because they are relatively centrally located, their socio-spatial degradation makes these neighborhoods attractive sites for urban redevelopment, especially for shopping malls, high-rise offices and high-end housing. However, as a result of the housing reform, the ownership of the apartments is fragmented. This has greatly increased the difficulty for redevelopment. Some owners require high compensation, which consequently increases the land and housing price. Conflicts between owners and developers or between owners are quite common. It always takes a long time before house owners and developers reach consensus on the redevelopment project. Like the urban village, another type of unique settlement in Chinese cities, Danwei housing is in need of renewal and can be potentially developed as affordable housing.

Nanyuan, Shenzhen (Source: Google Earth)
Diversify building and housing typology.

Strategies for a new renewal model
A renewal model for Danwei housing should emphasize both affordability and liveability. The possible strategies are:
 Rezoning community: Although the multi-level spatial structure of Danwei housing facilitates residents’ effective control over the neighborhood, the context of the neighborhood has changed and the old structure does not always work. It is necessary to restructure the Danwei housing neighborhoods spatially according to the privacy level (private area mainly for residents and public space for everybody).
 Defining public space: Homogeneity characterizes the public space in Danwei housing neighborhoods. This strategy aims to activate the public space by defining the function of public space on different privacy levels.
 Connecting home and work: Moving farther out in search of affordable housing often leads to higher transportation costs that eat up any savings. It can be more helpful to concentrate on transportation rather than just affordable housing.
 Diversifying building typology and housing typology: Danwei housing was originally designed for families. As the residents diversify, housing and building typologies have to adapt to the changing demand. When aiming at affordable housing, renewal should be the main approach instead of wholesale demolition.
 Strengthening public intervention and communal organization: The government can establish housing associations to guarantee affordability as the goal of renewal. Clarification of ownership and responsibility can reduce conflict and keep the quality of the neighborhood environment after completion. Community participation reflects residents’ demand into the plan so that the renewal can really benefit the residents.

Public space on neighbourhood scale (left). Public space in neighbourhood unit (right).

Integration of scales facilitates affordability
Danwei housing neighborhoods are characterized by a homogeneous spatial layout, which is a disadvantage and advantage at the same time. The urban context of the Danwei housing neighborhoods has changed radically. The new renewal model aims to improve affordability and maintain a certain level of liveability. To be specific: the model diversifies the homogeneous spatial layout of the neighborhood. The design of the neighborhood has to cooperate with the different contexts and reflects the different demands of the residents. Affordability, as an inextricable term, is concerned with both housing and non-housing issues, which is embodied in various scales. Therefore, there is an internal link between scales: urban scale (contexts), neighborhood scale and human scale (demand). Only when scales are considered coherently, affordability can be achieved as a quality of housing.

The renewal plan of a Danwei housing neighborhood: The flexibility of the plan involves residents’ demand on human and neighborhood scale. Furthermore, the fixed structure integrates the neighborhood into the contexts. (source: diagram by author)

Haotian Lin graduated in 2014. As a student at MSc Urbanism of the Delft University of Technology he took part in “Shenzhen Scenarios 2.0 – Livability in Shenzhen” within the Complex Cities Studio. This studio is co-organized by INTI as part of the New New Towns program. You can read his master thesis here.

 Chen, P. Nanfang Daily, 30 April 2014. 128,000 affordable housing under construction, only 58,000 finished.
 Chen, Y. & Zhao, M., City Planning Review, 12, 2012, pp. 19-27. Critical review and reflections on urban housing system reform and policy control in China, based on comprehensive perspective of economic social and spatial development.
 Shenzhen Municipality, 2006. The 11th five-year plan of Shenzhen economy and society development [Online]. Available: [Accessed 17th Dec. 2014].

Haotian Lin graduated in 2014. As a student at MSc Urbanism of the Delft University of Technology he took part in “Shenzhen Scenarios 2.0 – Livability in Shenzhen” within the Complex Cities Studio. This studio is co-organized by INTI as part of the New New Towns program. You can read his master thesis here.

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