China's changing urban development processes and urban landscapes in the transition towards a more market-oriented economy have received extensive research attention in recent years. Relatively, the governing of Chinese cities is still underresearched. This article aims to analyse the forces released both inside and outside the formal socialist state system and the impacts on phenomenal restructuring of urban governance, especially at local levels. Marketisation has created new elements beyond the reach of state work-units that represent the state's 'hierarchical' control. The pillars of the socialist governing structure-the party-state, the work-units system and household registration-are shaken by these forces. The changes in the organisation of people, capital, production materials, infrastructure and space fundamentally demand new urban governance. Territorial organisations such as the municipality, urban districts, Street Office and Residents' Committees are reinvented and consolidated to restore a governable society. The devolution towards the base level and the reinvention of local communities reflect the state's attempt to reconsolidate its power to create a governable society as well as to cope with practical pressures such as the provision of social assistance to poor and aged residents, re-employment of laid-off workers and the management of 'floating' immigrants. The combination of new market elements and decentralised state apparatus has given rise to the entrepreneurial endeavour of China's governance. This research highlights the micro-foundation of the new urban governance in addition to the `globalisation-capital mobility—city competitiveness' thesis.
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