China Special Situations Insight (Volume 3, Issue 8)
Urban Renewal in China (IV): Shanghai - A Government-Led Market with Emphasis on State-owned Enterprises
This is the fourth installment in our ongoing series regarding urban renewal in China and is a brief introduction to Shanghai's urban renewal policies. We summarize the distinctive characteristics and prevailing trends of urban renewal in the city.
On August 25, 2021, the Shanghai Municipal Government promulgated the Regulation of Shanghai Municipality on Urban Renewal (the Regulation). It was the first local legislative regulation in relation to urban renewal in Shanghai, and it signifies the city’s commitment to enhancing its urban renewal framework. On November 12, 2022, the Shanghai Municipality Government introduced the Guidelines on Shanghai Municipality on Urban Renewal (the Guidelines). This document is intricately linked with the pre-existing Regulation and is poised to steer the implementation of urban renewal initiatives across the cityscape.
Thus, Shanghai has established a comprehensive policy and regulatory framework following the “1+1+N” structure. The first “1” refers to the Regulation and the second “1” denotes the Guidelines. The “N” encompasses a range of supplementary documents delineating refined operational procedures and policy requirements to facilitate the systematic execution of urban renewal initiatives.
1.??The introduction of renewal coordinating subjects
Urban renewal in Shanghai can be categorized into regional renewal and piecemeal renewal. Regional renewal refers to urban renewal projects that are carried out with the aim of coordinating and arranging functional improvements, industrial development, ecological environments, municipal transportation facilities, and public services. It can encompass multiple urban renewal projects. Piecemeal renewal refers to urban renewal projects that are carried out based on the will of property rights holders. These projects are undertaken by property rights holders or other market entities to renew property rights holders’ own properties.
In the case of regional renewal, renewal coordinating subjects promote regional renewal, formulate a regional renewal scheme, confirm urban renewal projects and implementation entities, and coordinate the implementation of renewal projects. Renewal coordinating subjects play a pivotal role in Shanghai’s urban renewal projects.
There are two methods to determine renewal coordinating subjects: selection and designation. When using selection to determine the renewal coordinating entity, it should be carried out through processes such as public bidding or competitive negotiation. When using designation to determine the renewal coordinating entity, projects need to meet the relevant requirements.
领英推荐
2.?Government promotion and leadership
The overall strategy of urban renewal in Shanghai is characterized by a government-led framework. Firstly, the district government is pushing forward the urban renewal work, and is responsible for the organization, coordination, and administration of it. The sub-district offices and township governments carry out the work related to urban renewal. Secondly, the renewal action plan for both regional renewal and piecemeal renewal shall be confirmed and approved by the governments. Thirdly, governments organize the selection and determine the market entities as the renewal coordinating subjects. Governments may also designate the renewal coordinating subjects under specific circumstances:
(1)?For the protection of historical features, the transformation and upgrading of industrial parks, and the overall upgrading of municipal infrastructure, etc.
(2)?Pudong New Area’s government may designate the renewal coordinating subject to make overall arrangements to carry out the renewal of built-up areas such as the original tract transferred areas.
(3)?For regional renewal projects that involve different administrative districts, the coordinating entity is designated, approved, and confirmed by the municipal government.
3.?Market entity’ participation with emphasis on state-owned enterprises
The Regulation and the Guidelines do not restrict the type or nature of the renewal coordinating subjects, and market entities (including private entities) are eligible to apply for selection. According to our observations, urban renewal projects in Shanghai are primarily developed by state-owned enterprises or through collaborations between state-owned enterprises and other entities.
4.?Implementation of “retention, renovation and demolition” with an emphasis on retention and protection
The 12th Five-Year Plan for Housing Development in Shanghai, promulgated by the Shanghai Municipal Government on February 7, 2011, emphasized the principle of “demolition, transformation, retention, and restoration”. This approach combines acquisition and demolition with transformation, preservation, and restoration. However, the Regulation stipulates that Shanghai’s urban renewal shall adhere to the simultaneous implementation of “retention, renovation and demolition” with an emphasis on retention and protection.
This transition from a “demolition, transformation, retention, and restoration” approach to “retention, renovation and demolition” (with retention as the first step) represents a significant shift in direction. It is also in line with requirements by the Ministry of Housing and Urban-Rural Development to control extensive demolition, addition, and relocation, and to preserve and utilize existing buildings.
?
For further information, please contact Catherine Miao, Head of Special Situations and Alternative Investment at JunHe LLP: [email protected] or +86-21-22086350.