“Urban villages” emerge when the previous villages have been geographically incorporated into cities and granted urban administrative status. However, they keep their village collective economies, which are managed by village shareholding companies. Chinese urban communities are usually governed by residents’ committees, which are part of the state governance system and responsible for delivering public services.


In these urban villages, village shareholding companies are established to continue to take care of the village collective properties, such as their collective landholdings, and/or manage the unallocated compensation funds from the government to the villagers. The shareholder companies are only permitted to engage in economic activities, such as investing in real estate or service companies or renting out local manufacturing land or buildings that are owned jointly. In actuality, though, they actively take part in local administration and care for the villages. They support neighborhood events planned by residents’ committees, run welfare programs and other community services, and resolve disputes among neighbors.


Depending on various elements such as the size and viability of the village collective economy, whether the villagers stay in their current homes or move to contemporary urban residential communities, and the power dynamics between the shareholding companies and the residents’ committees in each community, village shareholding companies’ governance and authority differ across different regions of China.


The village shareholding firms are set up to manage unallocated compensation monies for land expropriation as well as any remaining community common assets. Their establishment also brings the prior community government practiced in villages to the urban setting.

The companies are playing a leading role in community governance in the urban villages, enjoying higher authority among the villagers than the residents’ committees that are a part of the formal state governance system. This is due to the companies’ collective assets, such as land holdings, strong ties with the villagers, as well as their financial support for the residents’ committees.


The ability of the urban villages to sustain their common resources and grow their village economies will determine how long this government will last. The community is more likely to maintain its governance autonomy the stronger and more successful its communal economy is. Furthermore, the ability of the owning corporations to recruit educated, younger villagers to run the businesses will determine how successful this governance is in the future. The younger generation has a stronger sense of place in the city and favors employment in “urban” corporations over that in their “village” owned businesses.