*5.1. The Land Institutional Change Led by Informal Land-Use Practices*

Informal land-use practices at the grassroots level force the promulgation and enforcement of formal land institutions. At the beginning of the reform and opening, FDI drove rapid industrialization of rural areas in the PRD, and numerous acres of agricultural land were converted into non-agricultural land and used in a disordered and extensive manner. In this context, the state introduced the National Land Management Law in 1986, to regulate land use. The state allowed the transfer of the rural collective land-use rights, provided that changes to the nature of the land were approved by the local government and moved the development rights of rural collective land into the hands of the state's agent, the governments above the county level. In addition, the state revised the constitution in 1988, separating land ownership and land-use rights, allowing the latter to be transferred in accordance with the law. While this was the first time the central government enacted market-oriented land institution reform, informal land leases and transfers had been initiated earlier at Changan in the PRD. The rapid growth of informal land led to the significant loss of agricultural lands beginning in the 1990s [6], capturing the attention of the state, which issued *the Regulations on the Protection of Basic Farmland* in 1998. This was the most rigorous farmland protection institution in the world, and it was formally implemented on 1 January, 1999. Before the enforcement of the land institution, the villagers in Changan accelerated the process of reclassifying agricultural land as non-agricultural land to capture economic benefits, leading to the loss of 6.90 km2 of arable land in Changan in 1998.

## *5.2. Some Informal Land-Use Practices Were Accepted by the Local Government*

Government responses to informal land-use practices in the PRD since the reform and opening have varied, in stages, between support, encouragement, toleration, acquiescence, elimination, and finally formalization. During this process, the state evolved from having no national land institution to enforcing one to allowing institutional innovation by local governments (see Figure 2). The National Land Management Law introduced in 1986 prevented any unit or individual from appropriating, selling, leasing, or transferring rural land.

**Figure 2.** The process of formalization of informal land practice.

The conflicts between the rigorous national formal land institution and the land-use demands of villagers in the PRD escalated in the 1990s. In response, the rural collectives divided the collective land property right into shares held by the villagers and established land stock cooperation institutions for land management, including leases of industrial lands to investors. However, land leases contained a semi-legal status under the joint-stock cooperative institution emerging in the PRD in the 1990s, which effectively circumvented the National Land Management Law, thus promoting rapid industrialization in Changan.

Because informal land-use practices made a significant contribution to the economic development in the PRD, the Guangdong Province government initiated *The Measures for the Transfer of Rural Collective Construction Land* in 2005. In order to further advance industrial upgrading and economic development in the PRD, the Guangdong Province government initiated the "three old" redevelopment policy after it was approved by the state in 2009. Informal land-use practices in the PRD were objectively accepted by both the policies, thus allowing the formalization of informal land use, which had existed for a significant period of time.

#### *5.3. The Agent of the Institution Innovation Changed from the Rural Grassroots to the Local Government at Higher Levels*

The rural land stock cooperative institution developed in the PRD in the 1990s was a typical example of the collective behavior of villagers, which was spontaneously initiated by the grassroots from the bottom up and driven by economic interests. It was an informal land institution outside the state, that ensured a steady supply of land for economic development in the PRD. On this basis, Changan developed a flourishing rental economy, thereby facilitating rapid urban development for nearly two decades, until the global financial crisis occurred in 2008 [58].

Guangdong Province began its urban development transformation and industrial upgrading strategy in 2008. However, due to strict regulations on the transfer of the rural collective land, the land supply for promoting the developmental strategy was woefully inadequate. There was a high proportion of construction land in the PRD, with the proportion of construction land in Dongguan reaching nearly 55%. On the one hand, the local government could not supply much more construction land for industrial upgrading. On the other hand, it is difficult to reclassify land that has been converted into non-agricultural land back to agricultural land. In order to address the shortage of construction land for the industrial upgrades and urban developmental transformation, the government must improve the benefit of low-output construction land and realize industrial improvements on existing informal industrial land. In this context, the Guangdong provincial government requested approval from the state for the "three old" redevelopment policy. As a land institution innovation, it facilitated the transfer of rural collective land, formalizing what had been informal land. The informal land practices and institutions that began at the grassroots level three decades ago have gradually become an institutional innovation, initially led by the Guangdong Province government and endorsed by the state.

#### **6. Conclusions**

This study used the case of Changan to examine the evolution of informal land-use practices. Informality in the PRD was a response to state choices in China after the reform of 1978. This paper analyzed the roots, main contradictions, and methods of the informal use practice, especially the relationship between this practice and the state, from a historical and critical governance perspective.

Informal land-use practices have experienced a range of governmental responses including encouragement, toleration, acquiescence, elimination, and finally formalization. The informality and formality of space production in Dongguan can almost be presented as a cycle that starts from an informal practice of bottom-up space production, with the empowerment of local institutions. The next step is a formal, top-down, centralized intervention, which leads to a loss of the local institutions' key role. This new situation of formality once more induces informal practices linked to the local reality, closing one cycle and probably starting another one. During this process, the state evolved from having no national land institution to enforcing one to allow institutional innovation by local governments. The land institution evolution in the PRD has been characterized by urban informality and consistent with the interests of the state. The informal land-use practices in the PRD can be regarded as the foundation of land institution innovation, which was ultimately authorized by the state.

China has gradually experienced the transformation from a planned economy to a socialist market economy since 1978. The PRD has contributed as an experimental zone for institutional innovation during this process. The state participated significantly in the process of change utilizing informal land institutions and formal institutional innovation, a classic example of reform and opening in the PRD. Roy contends that urban informality is a mode of governance and the state's production of space in its territory [24]. The state utilized its power to drive the institutional change and enact new policies to regulate the actors in urban development. Informal land-use practices are essentially the behavior of the state and its agents, which have determined the fate of the informal land-use practices through formal institutions. The new formal institutions redefine the formal and informal approaches, serving the strategies of urban development, and the needs of the state and its agents. Informal land-use practices and institutions always preceded formal land institutions in a process of continuous feedback, that promoted change in land institutions within the PRD, after the reform and opening in China.

Future studies should approach informal land-use practices and institutions rationally and objectively at the grassroots level, evaluating their impact on urban development, although some informal land-use practices have created missed opportunities. In particular, research should focus on the formalization of informality under innovation in land institutions, and the government should make a special policy for territorial lifecycle management (TLM). In Chinese governance, imperial power has not traditionally permeated the grassroots, yet, more institutional innovation is needed from the grassroots. When formal institutions are developed, earlier informal institutions may absolve, but new informality will be created. Urban development requires this sort of bottom-up institutional innovation from the grassroots.

**Author Contributions:** D.X. conceived and designed the research; Y.H. conducted this research, analyzed the data, and wrote the manuscript; G.H. revised and reformatted the overall paper. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research was supported by the National Social Science Foundation of China (41901197; 41930646), and the Guangdong Academy of Sciences (GDAS) Project of Science and Technology Development (No.2019GDASYL-0104004).

**Data Availability Statement:** The authors confirm that the data supporting the findings of this study are available within the article.

**Acknowledgments:** The authors thank the anonymous reviewers for their insightful comments and suggestions. The authors would like to thank Xiaoping Lan for their technical support.

**Conflicts of Interest:** The authors declare no conflict of interest.
