'Carrot and stick' approach to housing demolition and relocation under flexible authoritarianism in urban China

The paper examines how local states in urban China manage everyday conflicts arising from housing demolition and relocation, focusing on 'nail households' who resist eviction. It positions the 'carrot and stick' approach—combining rewards/co-optation with punishment/coercion—as a ground-level manifestation of flexible authoritarianism. The research asks: what is the underlying logic, operational mechanism, and socioeconomic implication of this approach under China’s reconfigured state-society relations? Against a backdrop of evolving crisis management modes and the goal of maintaining both stability and growth, the study argues that mixed formal/informal, administrative/market strategies have become rationalized as efficient means for local states to handle contentious redevelopment while sustaining economic objectives. Using a Dalian case, the study explores how local actors implement these strategies, when and why certain tactics are used, and with what effects on different social groups.

The paper situates 'flexible authoritarianism' within China’s shift from pure coercion to more pragmatic, adaptive governance that mixes market instruments and administrative control. Literature highlights the rise of consultative and responsive authoritarian practices, petition systems, NGO engagement, and financialization of urban redevelopment (e.g., LGFVs, shantytown redevelopment) as mechanisms to pacify unrest and stabilize society while promoting growth. Despite innovations, repression and surveillance remain core to authoritarian rule (e.g., emotional repression in petitions, incorporation and control of grassroots organizations, censorship). Urban redevelopment and nail households embody market-led accumulation and social contention, with local states often siding with developers, leading to displacement and unequal outcomes. Prior studies document both coercive tactics (utility cutoffs, intimidation, thugs-for-hire) and emerging conciliatory strategies (enhanced compensation, welfare placement), yet they seldom explicitly frame these as a systematic 'carrot and stick' strategy under flexible authoritarianism. This study addresses that gap by examining how formal/informal, administrative/market measures co-exist and are sequenced to manage nail household conflicts.

Case selection centers on a large-scale housing demolition and relocation project in central Dalian, a city motivated to boost growth via land-centered development. A government–developer coalition implemented the project using a special operational model ('raw land listed as leveled land'), enabling market instruments and resource mobilization despite contravening national rules requiring leveled land transactions. Approximately 1700 households with diverse socioeconomic backgrounds were affected. Fieldwork comprised multi-period ethnography: March–September 2016; August–October 2017; June–August 2018; March–June 2020; and May 2022. Data included: ten semi-structured interviews with local officials and developer representatives; participation in five internal coalition meetings (all in local state offices); over two dozen interviews with households; extensive site observations; and secondary sources (government documents and reports, meeting minutes, news and web articles). Political sensitivity initially constrained access; authors leveraged local connections to obtain candid perspectives on strategy design, pressures from upper-level authorities, media management, and stability maintenance considerations.

• Governance configuration: A local government–developer coalition unilaterally set compensation packages, used a non-transparent selection process, and deployed both administrative authority and market tools. Compensation options (monetary vs. resettlement housing) were announced directly to households without participatory procedures, provoking discontent and bargaining.
• Scale and outcomes: Of roughly 1700 households, about 1300 were 'handled' per a local official: ~700 chose housing compensation, ~500 chose monetary compensation, and ~100 received special offers. As of 2016, ~300 still refused to sign.
• 'Carrots' (early-stage): • Concessions: Monetary compensation increased from an internal 10,000 yuan/m² to 12,000, and then to 13,000 yuan/m² after initial protests; a resettlement option near the original site was added. Compensation for legal self-built housing was set at 2000 yuan/m². Concessions quelled demonstrations and advanced relocation. • Welfare provision: Free extra area and discounted area top-ups; refined decoration valued at 1000 yuan/m²; arranged public transport. For near-site housing, free area was smaller due to higher market value; area increments priced at tiered rates (e.g., 3800, 10,000, 20,000 yuan/m²). Crucially, the coalition arranged inclusion of the new site into the original elite school zone, a decisive welfare attracting many households. • Non-disclosure special offers: Targeted, individualized negotiations with households possessing guanxi or strong leverage (e.g., officials, relatives of officials, highly resistant cases). Deals exceeded standard terms (e.g., 18,000 yuan/m² after bargaining; a Japanese villa; up to 25,000 yuan/m²). These offers, though costly, were deemed efficient to prevent delays and political/economic risks.
• Propaganda (throughout, in phases): • Phase 1: Conventional media promotion, ceremonies, flyers, affective messaging to portray project benefits and accelerate agreements. • Phase 2: After 2010 restart and advent of the 2011 regulation, the coalition leveraged information asymmetry to warn resisters of legal penalties under the newer regulation, despite the project being governed by 2001 rules. • Phase 3: Administrative intervention including directing local media to suppress negative coverage; dissemination of misleading updates (e.g., claiming hardline nail households had accepted standard terms) to influence others.
• 'Sticks' (later-stage): • Threats and harassment: Systematic utility cutoffs (water, electricity, gas), property damage, nocturnal disturbances, and intimidation by demolition company personnel with gang backgrounds. Incidents included vandalism, physical scuffles, and verbal humiliation, pressuring households to relocate. Police responses were limited to warnings; perpetrators were not punished.
• Strategic boundary-setting: Despite concessions, the coalition refused on-site rehousing to protect the plan for high-profit luxury developments (projected sales: ~30,000 yuan/m² high-rise; ~60,000 yuan/m² low-rise; city average price in 2010 was <10,000 yuan/m²; urban per capita disposable income just over 20,000 yuan), demonstrating that carrots and sticks operated within a boundary defined by political-economic interests.
• Distributional effects: Tailored special deals favored well-connected households, exacerbating inequalities. Those without guanxi often faced harassment and accepted inferior suburban options with weaker access to services.

Findings show the 'carrot and stick' approach as a hallmark of flexible authoritarianism in urban redevelopment: a pragmatic mix of marketized concessions, welfare extensions, propaganda, and calibrated coercion, all bounded by the coalition’s political-economic objectives. The strategy answered the central imperative to maintain stability while sustaining growth by: pacifying collective contention through selective concessions; managing narratives and legal interpretations to deter resistance; and applying targeted intimidation when carrots and messaging failed. This operational logic addresses the research focus on how local states perform conflict management under reconfigured state–society relations. The results underscore that flexibility does not imply democratization; rather, it enables discretionary, unequal treatment based on households’ social and political capital, reinforcing state dominance. The approach also mitigates legal/regulatory gaps, expedites project timelines, and contains crises without overt, high-profile violence that could trigger upper-level scrutiny, but it entrenches inequalities and erodes rule-of-law norms.

The study contributes an empirically grounded account of how flexible authoritarianism operates through a hybrid 'carrot and stick' toolkit in urban redevelopment. By detailing the sequencing and tailoring of concessions, welfare, special deals, propaganda, and harassment, it shows how local states reconcile stability maintenance with growth imperatives while preserving profit-oriented redevelopment plans. The approach proves effective in advancing projects and pacifying conflicts but reproduces socioeconomic inequalities by privileging guanxi-rich households and disadvantaging vulnerable groups. It also reflects and exploits legal and institutional loopholes, suggesting the likely persistence of such practices in Chinese urban (re)development.