LAUSR

Abstract Following nearly three decades of urban sprawl, China's urbanization has entered a new era of land redevelopment that encompasses built-up land in villages in a manner that is unprecedented. Village redevelopment involves both dramatic institutional change and governance restructuring. The extant literature on this redevelopment focuses primarily on top-down initiatives launched by urban governments, paying little attention to villages' responses as actual landholders. Through a case study of village redevelopment in Nanhai, this paper examines villages' behaviour during periods of institutional change and their interactions with urban governments to shape final outcomes. Institutional uncertainty emerges during path-dependent institutional change, as revealed through the absence of effectively executed planning control and unclearly defined profit sharing. As a result, villages and urban governments sign incomplete contracts for entire redevelopment plans. Such agreements result in disordered competition for land rents that take the form of villages ‘holding up’ the government that has previously made a commitment to the village pursuant to the contracts. Villages maximize their profits and attenuate the government's role in ensuring public revenue, whereas government compromises related to development control challenge the capacity of limited public governance. The government's concessions related to profit distribution result in increased inequality between more prosperous villages and other groups, such as migrant populations and remote rural villages. Research findings contribute to a comprehensive understanding of newly created governance in redevelopment and call for a critical evaluation of existing urban renewal policies to ensure that urbanization is an inclusive process.