In its first document 2013 (2013年一号文件) Shenzhen announced that its intention to finish expropriating collective lands in order to transfer land use rights for high-end development to state owned real estate developers, like China Resources and Jingji. In official parlance its know as  land reform (土改), and yes, I’m starting to think I live in a post-ironic city.

The problem of Shenzhen urban villages is, of course, that they were not villages. Under Mao, they were incorporated into the state apparatus through collectivization. Villages became teams, several teams became a brigade, and groups of brigades constituted a commune. In turn, the communes were the basic administrative unit of Bao’an County, Shenzhen’s territorial predecessor. In short, the collectives had a modern bureaucracy, and did agrarian work in not quite primitive, but very rough conditions.

In 1978, led by liberalization in rural Anhui, teams and brigades throughout China began to dismantle, and Bao’an was no exception. Redeploying the administrative structure of the Maoist state, they created “new villages”, which continued to do agrarian work, but for collective profits. Traditional village relationships and historic identities facilitated this process. In Bao’an, however, the establishment of the Shenzhen SEZ meant that collectives could also invest in manufacturing and real estate development.

In 1992, Shenzhen incorporated the inner villages into the municipal apparatus and in 2004 the outer villages were incorporated. So technically, the villages, which had not been villages, were now urban neighborhoods. Except, they were also limited holding companies. And there’s the legal rub: Shenzhen urban villages were limited holding companies which owned investments that had been legally built on collective land, but now occupied state-owned land, creating a messy, grey area of compensation demands and property rights.  According to Shenzhen Urban Planning Chief, Wang Youpeng (王幼鹏),

The government cannot take [the land] back, and the collectives can’t use it (政府拿不回，集体用不了).

The Municipality’s convoluted description of the villages reflects this complicated history. In the first document of 2013, the villages are called “Former Rural Village Economic Organization Work Unit (原农村集体经济组织单位)” — hee! But here’s the not-so-funny point: The 2013 paper legalizes the direct transfer of collective lands to real estate companies. Previously, the villages negotiated with the Municipality, which in turn accepted bids from real estate companies. Now, the Municipality has stepped back from this role. Instead, the villages may negotiate directly with the companies.

In terms of asset transfer, it means that villages must remove their technically illegal buildings from municipal lands. Their are two compensation packages. Either, villages sell their buildings, giving half the price of the sale to the Municipal government, or the villages sell their buildings and give 70% of the price to the Municipal government, but receive up to 20% of whatever is subsequently built on the land.

Xi Jinping has come and gone. The Shenzhen People’s Congress has met and disbanded. Exhortations to study the Spirit of the 2013 18th National People’s Congress have proliferated throughout Shenzhen. And now we know what it means – there is a new means of legalizing the transfer of property and resources from the urban villages to Shenzhen Municipality, further concentrating property and resources in the hands of whoever happens to be in charge of negotiating this process on behalf of the People Party.

That said, after a surge in the stock market, the general response has been one of confusion. It seems the paper is unclear on how the process will actually take place.