Actor relations and the institutional logic of Chinese urban space transformation: Based on a comparative study of the urban renewal cases

Capital flow across domains and regions

Neoliberal urban theory views urban space as a nexus of capital, power and society, serving as a critical node in the capitalist production process. It not only promotes capital flow but also absorbs capital surplus (Beraud, 2012; Serin et al., 2020). Local governments seek to enhance the local economy, operating profits, and excess land rent by optimizing urban space functions to enable low-cost and efficient capital flows, thereby accelerating capital accumulation and circulation. For example, they attract overseas investment and expand construction funding through large-scale infrastructure, real estate initiatives, and favorable financial policies; launch urban redevelopment plans and build transportation hubs; streamline administrative approval processes to reduce barriers to resource flow; incorporate urban planning and administrative adjustments into local policy agendas; link housing policies with the financial system; and foster diverse expressions while improving coordination mechanisms among government, enterprises, and multinational corporations (Atkinson, 2020). In addition, central and local governments shape spatial separation to promote differentiated capital flows and to capture excess land rent. In short, by establishing a local governance system that integrates public and private sectors, cities can become key nodes in global capital flows (Aalbers & Haila, 2018; He & Zhao, 2020a, 2020b).

The unity and separation of space value

Urban space possesses both exchange value and use value (Christensen, 2014; Farahani, 2017; Ozola et al., 2020). When capital flows into cities, it increases the value of space and redistributes it among various actors (G. Yin et al., 2024). For example, the governments obtain land-use fee and transfer fee; village collectives and villagers obtain land compensation and rental income; and enterprises obtain investment returns and operating profits (Zhang, 2021). This phenomenon involves two aspects. First, the emphasis on exchange value often comes at the expense of use value. To obtain space exchange value, various actors strive to exploit local resources, such as forming elite governance alliances, engaging in corporate lobbying, and designating growth zones. When residents do not benefit from exchange value, they instead bear the associated costs, which can lead to conflicts (Yi et al., 2024). Second, balancing exchange value and use value is crucial. Focusing solely on exchange value may pose significant risks, including hindering local governments’ ability to provide collective goods and services, promoting the privatization and financialization of urban operations, and exacerbating wealth inequality and social polarization (Painter et al., 2022).

Therefore, it is essential to enhance use value and promote inclusive development to mitigate conflicts between exchange-value seekers and use-value protectors. For example, policymakers should prioritize the redevelopment of aging communities, foster community identity, and ensure that growth benefits are widely shared. Moreover, in response to development inequality, growthism needs to be revised by replacing narrow economic targets with broader, sustainable development objectives.

Public service supply

The above two perspectives directly relate to the provision of public services. On the one hand, capital inflow drives capital reproduction, leading to cuts in collective consumption expenditures. This conflicts with workers’ needs for collective consumption, resulting in space exclusion and social stratification. On the other hand, the divergence between exchange value and use value means that certain actors benefit from space transformation, while others bear its costs. This may lead to various problems, including urban center decline, shrinking municipal revenues, and widening wealth gaps.

Therefore, public services are crucial for bridging urban social differentiation (Barseghyan et al., 2021). For city governments, public services serve as a key source of political legitimacy (Zhang et al., 2025). When social tensions emerge, they implement public service policies to mediate the interests of various actors. This includes connecting functionally diverse urban areas into integrated metropolitan networks; providing professional community services to improve social welfare; and accelerating fiscal transfers to enhance redistributive efficiency (Li et al., 2025; Trofimov 2017). For non-governmental actors, growing pressure to provide comprehensive public services has prompted private and semi-public entities to participate in public-private partnerships (PPPs). For example, in Pittsburgh, youth groups have advocated for and participated in education reform campaign. In TianJin, China, community committees play a dominant role in delivering public goods, especially in social services and sports projects (Luova, 2011).

In summary, the above factors highlight the core issues of urban space transformation: who benefits? Who bears the costs, risks and negative externalities? And how can contradictions be reconciled? Furthermore, these factors affect shape actor relationships across three aspects: benefit acquisition, cost sharing, and benefit-cost coordination.

Shortcomings of existing studies

Based on the strengths, goals, cooperation and game mode of actors, four types of governance relationships emerge: “a strong central government with a weak local government”, “a weak central government with strong local government,”“a weak government facing strong community and business elites,” and multi-level governance relationships across space scales. Various actors are integrated to promote urban transformation, forming models led by growth alliances, community alliances, and state-led initiatives (Chen, 2019; Guo et al., 2018; Liu et al., 2018). However, several shortcomings remain apparent. First, while existing studies focus on spatial reconfiguration and property rights, they lack clarity on the underlying influencing factors. In particular, there is insufficient explanation for areas characterized by limited capital flow, uncertain value distribution and incomplete public services. This instability in actor relationships complicates efforts to uncover the dynamic mechanisms and institutional logic underpinning urban spatial transformation. Second, the analytical perspective tends to be fragmented, lacking a comprehensive framework for understanding the behavioral logic of actors. As a result, boundaries between interest subjects become blurred, and interaction mechanisms grow increasingly complex, making it challenging to establish a clear conceptual and classification system. Third, there is insufficient analysis of how governments respond and formulate policies in relation to different governance configurations. In view of these shortcomings, this paper integrates various influencing factors through three case studies of urban areas, aiming to examine the decision-making logic and internal mechanisms of urban governance.

Analytical framework

This paper constructs an analytical framework based on three perspectives: capital flow, space value and public services. First, neoliberal urban theory holds that capital flow is the central factor in urban development. Capital generates surplus profits, absorbs over-accumulated capital, and produces differential ground rent, thereby becoming a focal point for various actors (Harvey, 2001). Governments attract investment through various spatial policies and distribute benefits to actors. When actors benefit, they are likely to cooperate and actively promote spatial transformation. Conversely, if anyone fail to benefit, competition and conflict may arise. This leads to Proposition 1: Due to the separation of space operation rights and ownership, once one party’s interests are damaged, cooperation may break down and the transformation process may stall.

Second, urban space transformation drives a separation between the use value and exchange value of space, leading to divergent outcomes in which some actors capture value while others bear the costs (Logan, 1997). Therefore, urban space transformation must address not only “who benefits” but also “who pays.” For example, areas with high land-use efficiency and low development costs have been allocated to local governments and real estate enterprises, allowing them to capture exchange value, that is “price increases return to the public”. However, many residents are excluded from these benefits while bearing the associated social and economic costs. This leads to Proposition 2: Urban space transformation separates exchange value from use value, resulting in a mismatch between those who benefit and those who bear the costs. Then benefits are captured by one party while others bear the costs, conflict and resistance may emerge, potentially disrupting the transformation process.

Third, neo-Marxist urban theory argues that capital accumulation promotes expanded reproduction while reducing collective consumption, creating a contradiction with the social reproduction needs of labor and leading to social polarization and urban crisis (Neuman & Smith, 2010). This dynamic necessitates government provision of urban public services to reduce disparities among cities, between urban and rural areas, and within urban communities (Castells, 1983). Therefore, urban space transformation has blurred the boundaries between urban and rural areas, leading to functional confusion, diversification and complexity among actors, and exacerbating the pressure on public resources. Governments should improve the coverage and supply efficiency of public services to narrow the regional disparities. This leads to Proposition 3: public services can help compensate for the unequal distribution of benefits and costs resulting from space transformation. Otherwise, imbalances and conflicts may arise, ultimately stalling the transformation process (Figure 1).

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Figure 1.

Analytical framework.

Core concept and research method

The analysis focuses on three key dimensions. First, capital functions as the primary driver of urban development. Governments utilize urban space to attract corporate investment and achieve commercialization of urban assets. Second, space value encompasses both use value and exchange value. The transfer of ownership and management rights can lead to a divergence in value capture, for example, real estate enterprises appropriate exchange value while residents retain only use value. Third, urban public services refer to infrastructure and services that meet residents’ needs for survival and development, including transportation, energy, healthcare, public safety (Table 1).

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Table 1.

Measurement and Investigation of the Analytical Framework.

Three factors affecting urban construction actors	Mechanism	Operation and measurement
Capital flow	The obtain and distribution of benefits for actors	1. Assess the degree of matching between business needs and urban space 2. Examine the forms of benefits obtained by government, enterprises, residents and other actors
Space value	Cost transfer and sharing of actors	1. The cost transfer of urban spatial transformation, such as negative externalities, functional deviations, illegal income 2. Investigate whether the rights and responsibilities of actors are equal
Public service	Benefit-cost coordination	Examine whether the public services in urban and rural spaces are unified 1. The public services provided by urban governments meet the production and living needs of rural areas 2. Village community public services can be self-sufficient

This article employs a qualitative case study approach and conducts a comparative analysis of three typical urban renewal cases in southern China. Compared to other research methods, case comparison can systematically analyze complex phenomena through a small number of cases, thereby facilitating better control over confounding variables. It also enables the tracing of causal mechanisms and explaining why certain outcomes occur by comparing how different regions address similar challenges.

Case selection is guided by two criteria. First, the principle of “maximum difference”: The three areas represent distinct models of space transformation. B Street in L District involves demolishing old buildings and constructing new ones; D Town in N District focuses on adjusting space functions; and F Street in H District emphasizes comprehensive governance. At the same time, all three areas share common characteristics: they pursue urban development through small-scale, decentralized, and low-cost interventions. Common challenges include low land utilization and yield rates, ambiguous land uses and boundaries, and encroachment on residents’ rights and interests. As a result, identifying a transformation pathway has become a pressing priority for all three areas. Second, controlling for temporal and space factor. Temporally, the development processes of the three areas are comparable. In each case, local governments have deregulated the supervision and operation of collective land to attract investment, prompting villagers to independently construct factories and lease them to enterprises, resulting in a fragmented space pattern. Furthermore, these three areas have gradually transitioned to the phase of stock development, necessitating the promotion of space redevelopment. Geographically, the three areas are proximate, sharing similar institutional and governance contexts.

B Street in L District

In 2002, all land in the city had been converted to state-owned ownership, accelerating the nationalization of collective land on B Street. Of the 3,054 hectares of land within the jurisdiction, construction land accounts for 57%, forest land for 22.36%, and other types for 20.64% (Figure 2, Figure 3). Due to the scarcity of available construction land, there is no surplus land for future development, and expansion can only occur through urban renewal. This paper analyzes the governing logic of actor interactions through three analytical lenses: capital flow and benefit distribution, space value transfer and cost sharing, and public service provision and coordination.

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Figure 2.

Ecological control and built-up area of B Street

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Figure 3.

Non-agricultural construction land of B Street.

D Town in N District

The blind expansion and disorderly growth of urban space have led to low utilization efficiency and an inability to meet the needs of industrial development (Figure 4). In response, N District has introduced a series of planning schemes. For example, in 2014, the Provincial Department of Land and Resources designated it as a comprehensive pilot for “3 years old reconstruction”. In 2017, it was identified as a pilot area for reform of the national homestead system. In 2018, plans were made to demolish 1.5 million square meters of illegal buildings. The functional adjustment of D Town includes four approaches: breaking through operational time limits; clarifying ownership and administrative processes; restricting the scale of agricultural industrialization; and integrating fragmented spaces. These initiatives aim to integrate the intertwined village-level industrial parks, shift the space function from production to consumption, and improve the overall quality of urban areas. It is also examined from three aspects:

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Figure 4.

Collective construction land of N District.

Space value transfer and cost sharing

First, the government should coordinate various conflicts, which involves two main aspects. The one is mediating conflicts between the government and society. For example, D Town has launched a campaign to demolish “two violations” (illegal construction and illegal land use), which may conflict with local residents’ interests in streamlining procedures and accelerating project implementation. Meanwhile, N District is seeking suitable locations for public facilities to alleviate the shortage of public services. However, many residents oppose the siting of such facilities as hospitals, highways, and parking lots near their homes due to concerns about noise, traffic, and property values. Furthermore, space occupiers tend to construct industrial projects with small scale, short-cycle operating industrial projects with quick returns, rarely reserving land for public infrastructure. The second aspect involves coordinating conflicts among government departments. In urban road network construction, differences in finance resources, technical standards, and administrative capacities across different levels of government hinder the implementation of unified planning, resulting in an imperfect and fragmented network system. At the same time, horizontal departments apply inconsistent criteria in defining spatial types, boundaries, and functions. For example, discrepancies between urban planning and land use planning lead to overlapping or conflicting zoning designations, unclear planning control lines, weak enforcement of ecological protection boundaries.

Second, imbalances in interests and burdens can trigger social risks. For example, D Town’s development strategy emphasizes urbanization in the east, industrialization in the central region, and ecological conservation in the west (Figure 5). This approach results in a higher proportion of construction land in the eastern area compared to a lower proportion in the western area. Such differentiated spatial positioning leads to unequal land transfer revenues, exacerbating regional economic disparities and triggering social tensions. Especially for actors located in agricultural or ecological conservation areas, they are unable to reap the benefits and lack sufficient funds to promote transformation. In short, while various actors may obtain certain benefits, the distribution of responsibilities and costs remains highly uneven.

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Figure 5.

Three development regions of N District.

F Street in H District

F Street provides low-cost spaces for production, living and trading support the textile industry. However, with the acceleration of urbanization, the textile industry has become incompatible with urban development, leading to problems such as high spatial compression, difficulties in industrial upgrading, and elevated governance costs. In response, H District has launched a comprehensive renewal plan targeting 638 plots covering a total area of 26.37 km², aiming to improve the urban landscape and expand functional urban space (Figure 6, Figure 7).

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Figure 6.

Commercial space layout of H District.

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Figure 7.

The space functional division of F Street.

Case summary

As previously mentioned, the analysis of the three cases primarily focuses on three aspects: whether the benefits generated by capital flows are equitably distributed among different actors; how responsibilities and costs are shared among actors during the process of space value transfer; and whether public services can be effectively provided to compensate for imbalances between benefits and costs. The more balanced these three aspects are, the lower the costs and the higher the effectiveness of promoting urban space transformation.

In case 1, with respect to capital flows and benefit distribution, the scale of development and functional transformation align with the goals of the government and enterprises, enabling all actors to benefit. In terms of space value transfer and cost sharing, all actors are treated equally. Concerning public service provision and coordination, the city government has made efforts to bridge the gap between urban and rural public services, thereby minimal conflict among actors. Thus, a balanced relationship emerges. In case 2, due to uneven collective land transfers and functional divisions, some actors benefit while others do not, resulting in a mismatch between benefits received and costs borne. Moreover, N District has made substantial fiscal investments to integrate fragmented public services. Thus, an adaptive relationship emerges. In case 3, certain actors derive illicit gains, while others not only fail to benefit but also bear the costs of spatial transformation. Furthermore, significant disparities in urban-rural public services persist and are difficult to overcome, contributing to an adversarial relationship among actors. These cases support the propositions presented in this paper, that is, under a balanced relationship, actors experience equal benefit distribution, even cost-sharing, and unified public services, resulting in a high degree of consistency in their objectives and promoting smoother urban space transformation. Under an adaptive relationship, actors may both disagree and collaborate, necessitating government mediation. Under adversarial relationship, actors experience unequal benefits, uneven cost-sharing, and inadequate public services, preventing concerted action and hindering urban space transformation (Table 2).

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Table 2.

The Influencing Factors of Urban Space Transformation and Actor Relationships.

Balance degree of income distribution	Equivalence degree of cost sharing	Degree of uniformity in public service	Consistency of actors	Urban space transformation
+++	+++	+++	+++	demolish old buildings and build new ones
++	++	++	++	adjust the space function
+	+	+	+	comprehensive governance

Note. +represent the degree.

Urban space transformation redistributes interests and reshapes the structural relationships among actors. In response to varying actor dynamics, the government adopts differentiated governance strategies. Government policy objectives are not only to promote the local economy, land finance and official promotions but also to enhance social welfare and ensure long-term stability. Obviously, once a public policy might affect social stability, even if it promotes economic growth, the government tends to suspend or revise the decision. As deepening of urbanization, actors have become increasingly complex, diverse and heterogeneous. This shift means that urban policies are increasingly formulated based on the structural relationships among various actors, rather than within a homogeneous bureaucratic framework. In the cases discussed above, despite significant changes during the process of demolishing old structures and build new ones, actors in B Street share common goals and cooperate effectively, avoiding profound contradictions. Actors in D Town engage in strategic interactions, prompting the government to adopt more moderate policies to balance competing interests. Actors in F Street are in conflict or even confrontation, limiting the effectiveness of comprehensive governance and reducing its impact on individual actors. Such a differentiated governance approach facilitates urban spatial transformation while minimizing social conflict at a relatively low cost.

Conclusion and recommendation

This paper explores the fundamental drivers and organizational foundation of urban space transformation. Its significance is multifaceted. First, it explores optimization strategies for urban space transformation from the perspective of key actors. Existing studies generally fall into three categories. The first proposes models based on “dominant-dominated” dynamics, such as government-led, enterprise-led, or social-led. The second classifies spatial transformations according to intervention intensity such as demolition, controlled redevelopment, and incremental renewal. The third evaluates outcomes in terms of public welfare, cost spillovers, and cost internalization, often in relation to risk distribution. However, these explanations tend to overlook the underlying reasons for the formation of actor relationships. This paper provides a theoretical analysis framework and identifies the necessary conditions for building a stable structural relationship: balancing benefit distribution and cost sharing, and promoting the equalization of public services. Second, this paper contributes to the theory of urban governance by analyzing how local governments adapt to evolving actor dynamics. Urban space transformation has blurred the boundaries between urban and rural areas, constraining governmental authority, straining administrative resources, and increasing governance burdens. Applying the analytical framework of “capital flow- space value-public service,” this paper establishes a systematic linkage among local governments, actor relationships and urban space. This approach endows space transformation with not only economic attributes but also social and governance attributes, thus making it more flexible and adaptable.

These insights offer practical implications for urban governance. Variations in economic development, social structure, and access to public services shape diverse actor relationships. Government strategies depend on the stability of these relationships and are influenced by capital flows, space value distribution, and public service provision. When structural relationships are stable, governments may pursue more aggressive development strategies. In contrast, when relationships are fragmented or adversarial, they tend to adopt more moderate and adaptive policies.

This paper has two main limitations. First, the case study approach has inherent limitations. Although these three cases exemplify three models of urban spatial transformation, other areas—such as ecological conservation and urban village redevelopment—have not been covered. Relevant cases in these domains should be examined in future research. Second, the discussion on policy implications is relatively simple. In reality, urban policies are highly complex and multifaceted, and further research is needed to identify optimal strategies for urban spatial transformation.