Value Trends Under the Transition in Urban Renewal— The Case Study of Shenzhen

In the process of urban renewal, institutional arrangements and governance approach are mainly determined by the dominant values at that period, which affects the allocation of rights and interests among involved stakeholders. At the turning point of China’s urbanization, value trend which turns to bemore rational and inclusive is to take full consideration of various needs of different participants, trying to keep balance between economic efficiency and social justice. With appropriate institutional arrangement, urban economic growth can be stimulated by reducing transaction costs and contributes to the overall social benefits.Then where is the binding point? Borrow from new institutional economics theory, this paper attempts to interpret the latest urban renewal regulation acted in Shenzhen. By revealing the nature of renewal process, we take an analysis from the aspects of institutional arrangement and public value which reflects the value behind. Finally, we discuss about value-oriented policy design, and summarize the public policy trends of urban renewal under the context of changing socialist market economy and urban development.


Relationships involved in urban renewal
Leading by the government, land use planning and the renewal process aim at the ultimate blueprints, which deviates from the balance of interests between the demand on the basis of property right system and market economy. And the value crisis from bottom-up public is ignored. 2. Property rights.
In urban and peri-urban areas the value of a piece of land lies in the rights attached to it. (Renard V., 2007) The demarcation of interests relies on property rights identification. Clear property relation will prevent disputes, interest conflicts, and remove the gray space (the remaining property, etc.).

The transaction costs.
The implement of urban renewal partly depends on the amount of transaction costs. Reducing the transaction costs will increase the possibility for redevelopment, while otherwise, will decrease. Transaction costs is related to property rights transfer and control, in a world that transaction costs is zero, there is no institution and organization. (Coase R, 1998) but in the real world, this ideal situation does not exist, so the initial arrangement, namely the allocation of resources, will lead to different results.
4. Principalagent. It means to prevent the public sector to become the "economic man", otherwise the defenders of public interest will deform. While a positive approach to economic externalities can lead to some public-private goods that the pure market cannot supply (Alexander E.R. A, 2001)   Property right is the core element for coordination of interests.

Efficiency-oriented: institutional tools for renewal----
With clearly definition of initial ownerships and property right from the very beginning, and added-value proportion, Shenzhen government safeguards rational allocation ratio of each subject involved, and balances between stakeholders' benefits, which ensures a justice process and avoids costs of loophole by institutional reason.
The rigor of this process reflects a shift of governance towards more attention to public rights, equitable public policy, importance of legalization and normalization.

Turn land added-value into package of public goods
The Measures sets a mechanism of bundling public facilities together with renewal. The renewal process brings added-value to the land and space. When the right property is transferred from the owner to the developers, the developers should pay for the added part to compensate for the external loss of the overall urban interests. This process is actually to counteract the externality of added value caused by redevelopment.
In the past, most of the profits benefit the government and developing agents. The Measures in Shenzhen takes a big step forward. Through assessment and reallocation of renewal profits, the interests are divided into three parts. That is, one part for the government in the form of reserved land for further sustainable development. One part of the profits is directly invested into public housing construction by a way of bundling projects for public facilities described above and one part for the people who bear the loss as compensation.
Thus, the advantage of market is expanded to public goods production, which contributes to social justice. Nevertheless, the quality and location of affordable housing still needs further supervision to ensure the efficiency.

NEW institutional arrangement
The guideline for declaration also requires for a pre-stage survey of renewal willingness of the owners.
Project needs to meet basic standards in order to be implemented.
For example, if it involves in only a single parcel of renewal unit or village in inner city, there should be more than 2/3 percentage of the total owner amount or the total construction area, if it involves in many parcels, the percentage should be increased to 4/5. If it is a residential community, the percentage for admission reaches to 90%. If one looks back the urban renewal in the past, although the mechanism of public participation is always advocated by planners, it finally turns to be a slogan or concept with no impact.

Justice-oriented: reflection of public value----
There has been no regulation before taking it seriously in normative provision form.
We see the prototype of bottom-up collection methods of the public voices in Shenzhen's measures which reflect the pluralistic value. This provision minimizes the initial transaction costs, and makes it easy to reach a consensus for a smooth progress.

Justice-oriented: reflection of public value----
The regulation clarifies an arrangement of infrastructure and public facilities construction within the renewal program including : scale, proportion, division of responsibility, mode of construction and pricing standards to ensure its implementation.
For small parcels, there are specific regulations for infrastructure, public facilities, affordable housing, rights and responsibilities.
SOURCE: Wang Jia. redrawn by the author A case of infrastructure and public facilities construction arrangement in renewal project 3 Solution