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While the economic system in China reformed from centrally planned economy to market orientated economy, the Chinese urbanization also shifted from industrial urbanism to post-industrial urbanism, especially in large cities. And the emergence of gentrification as a new social phenomenon at the moment has indicated the trend in the next round of urban development.
Beijing 798 Art Zone is a typical example reflecting the general scene of such change. Through sixty years' time, its identity has transformed from an old industrial site to an active art district, and is now facing the reality to be further developed into a commercial zone gentrified by rich middle-class.
There is no single element capable of explaining the entire and sophisticated picture of such process. The changing political economy and social conditions both contribute to the transformation of space over time. However, among all, culture and capital are always the most important driven factors in the gentrification process.
Part 01: A Brief History of Beijing 798 Art Zone
Part 02: A Comparison Study of SoHo, New York
Part 03: Gentrification in Beijing 798 Art Zone
Part 04: Conclusion
Part 01: A Brief History of Beijing 798 Art Zone
Exterior view, Beijing 798 Art Zone, 2008 Interior view, Beijing 798 Art Zone, 2008
The site of 798 Art Zone was originally one part of Beijing North China Wireless Joint Equipment Factory. It was also called 718 Joint Factory, taking a total land area up to 600,000 sqm in northwest Beijing. In 1950s - the early time of the cold war, the newly formed People's Republic of China was eager to achieve the goal of national industrialization in order to establish its own economic system. The construction of large-scale factories at the time was to follow the first five year plan (1953-1957), aiming to transform China from a long-history agricultural country to an advanced industrial country based on the Soviet model of developing heavy industries.
718 Joint Factory was initially designed by the East German experts from an architectural institution in Dessau in 1952. Influenced by Bauhaus style, the design was aimed to meet the practical demands, bring the technical and aesthetic property of new material and new structure into effect, as well as retain simplicity and flexibility. The factory was then constructed from 1954 and put into production in 1957.
Through the entire 50s, the 718 Joint Factory was regarded as the symbol of national industrialization in the Chinese capital city.
In the following twenty years, China had suffered huge social and economic revolutions. Industrialization process was paused severely and even stopped for a period of time. From the failure of The Great Leap Forward in 1958 to the Reform and Opening up policy in 1979, China had shifted from centrally planned economy to market oriented economy, which resulted the fundamental changes of organization for many leftover factories from the 50s.
In 1964, the supervisor units canceled the organizational system of 718. 706,707,718,797,798 and 751 started to operate separately as independent factories. Shortly afterwards in 1970s, the once state-owned factory was converted to non-state-owned factory. However the change of organizational system didn't actually bring the expected "spring". Till the 1990s, most workers in the factories were so poor that they could no longer make a living here. The final bankruptcy of the factories turned this huge area into an abandoned land at the edge of Beijing city.
In December 2000, the former six factories of 700, 706, 707, 718, 797, and 798 were reorganized and incorporated into Beijing Seven-star Science and Technology Co., LTD. The Seven Group rented out the empty plants on a short-term basis.
Attracted by convenient traffic, extremely cheap price, unique style of Bauhaus architecture which was featured with high ceiling, massive open floor plan and big windows, many art organizations and individual artists came to rent the vacant factories and transformed them into their work and living space since 2001. Gradually, 798 became a district full of galleries, art studios and cultural companies. The name - 798 Art Zone came into being.
However just when 798 Art Zone was developing prosperously, the artists were facing evictions due to the pressure from both the government and the real estate developers. The government was proposing re-development project in 798 Art Zone and the surrounding areas for Zhong Guan Cun Science and Technology Electronic Park. And the real estate developers were investing more and more high-end residential projects around 798 areas for the rich middle-class, which had resulted an intensively besieging situation towards the art district. Also the rising reputation of 798 Art Zone had attracted large tourists visit the site everyday. Art atmosphere was overwhelmed by commercial activities in the area. The rise of land price caused the displacement of artists.
Many people are predicting that eventually 798 Art Zone will be transformed into a commercial zone similar to the SoHo neighborhood in New York. One day only the luxury brand can afford the space and no artists will be able to stay. The pure art in the so-called art zone will be dead soon.
Part 02: A Comparison Study of SoHo, New York
The development process of SoHo in New York is the typical US example of urban landscape shaped by gentrification.
SoHo is located by the southwest side of Manhattan and has been an industrial zone especially for textile firms since late nineteenth century. After the World War II, the modification in structure of advanced capitalist cities in the US with the shift from industrial to service-based economy had caused the decline of manufactories in the centre of the city. Many factories in SoHo started to move out, leaving large quantities of cast-iron-style buildings known as Loft in the district. While some of them were transformed to warehouses and printing plants, others were unoccupied or torn down to be replaced by gas stations, auto repair shops and parking lots and garages. By the 1950s, the area got the nickname called Hell's Hundred Acres, an industrial wasteland full of sweatshops and small factories in the daytime, but empty like a ghost town at night. In the mid-1960s, many artists got interested in the area because of the industrial characters of the buildings: high ceiling, generous space and big windows providing natural light. And after all, the most important fact was the low rental price, which meant that the artists could actually occupy the whole floor or even the whole building. Many of these lofts were then redesigned and converted into dual functional studios combining living and working together. However at the time, it was actually not permitted to live in the loft by law. In a way, these artists were squatted illegally.
At the time, living in a loft was not appreciated by middle-class. As Sharon Zukin wrote in his book Loft Living, it was "considered neither chic nor comfortable - if the possibility was considered at all. Making home in a factory district clearly contradicted the dominant middle-class ideas of 'home' and 'factory', as well as the separate environments of family and work on which these ideas were based"  .
It was only the choiceless option of poor artists.
In 1971, the amendment of Zoning Resolution had given permission for the artists to live where they worked. The area also received landmark designation as the SoHo-Cast Iron Historic District in 1973, which had preserved the original architecture and avoided the area to be redeveloped.
The change of policy and rising reputation of SoHo had attracted more and more artists to work and live here. Soon, SoHo became vibrant again as the center of art and design in New York City. The desirable cultural atmosphere created by art events, and the fluid loft space gradually formed a new lifestyle. "People began to find the notion of living in a loft attractive"  .
"An increasing number of middle-class people moved into certain cultural patterns, particularly an active appreciation of 'the arts' and historic preservation, which had previously been upper-class domains. Their growing identification with fine arts production and fine old buildings let them first to try to protect space for artists and historic preservation and then to appropriate this space - which was often in loft buildings - for themselves. In this process, art and historic preservation took on a broader meaning. They became both more commercial and less elitist." 
The altered view of loft living reflects the new life attitude among middle-class people between late 1970s to1980s. Most new middle-classes at the time were born after the wartime. In a trend toward a new lifestyle with fewer children, postponed marriages and a fast-rising divorce rate, they were eager to free themselves from the traditional idea of family. Unlike their parents, their desire and dreams were defined in urban rather then suburban terms.  They'd prefer to stay in the city to enjoy life or pursuit their careers rather than live in countryside for a peaceful ('boring') life. Also, according to Raphael Samuel, the new middle-classes are "outward looking rather than inward looking. They have opened up their homes to visitors, and exposed them to the public gaze."  Also they "have a different emotional economy from that of their pre-war predecessors. They go in for instant rather than deferred gratification, making a positive virtue of their expenditure, and treating the self-indulgent as an ostentatious display of good taste." 
The character of SoHo did fulfill their new desires --- the unusual way of living in a loft; the freedom and passion of life from an artist neighbor; home as a place taking the rich history from the past in architecture termsâ€¦The wonderful cultural atmosphere full of art and adventure is no doubt one of the main reason that attracts the middle-class to gentrify SoHo.
In this stage, culture showed its great importance to push gentrification process. The move-in of middle-classes is the concrete evidence. And very soon the fine art production started to absorb investment of commercial capitals. Sharon Zukin regarded this type of "urban renaissance" model as the "Artistic Mode of Production" The role of capital investment will then take over the cultural effect and push forward to the next stage of gentrification.
And of course the intervention of investment capitals is not just the result of the cultural attractions. It also sat in the broader social economic modification happening in the country.
First is the major suburbanization process across the US caused most middle-classes moved to live in the countryside while left the city unoccupied. The declined city with loads of abandoned spaces was then taken over by lower classes and homeless people. Such capital devalorization produced the 'rent gap', which referred to "the disparity between the potential ground rent level and the actual ground rent capitalized under the present land use"  . Potentially it provided great opportunities for developers to invest new projects and earn high profit. It had encouraged gentrification and "urban renaissance" in the US cities.
Secondly, in order to alter the situation of declined city, the US government had proposed a series of urban renewal plans including the clearance of slums and encouraging real estate development. Many areas especially around central business districts (CBD) are been redeveloped into high-end apartments, commercial offices and cultural facilities, which had enlarged the CBD and improved the urban conditions of living.
Thirdly, according to the law of market economy, production is always driven by consumption. Therefore, the investment of SoHo was driven by the fact that middle-classes had the strong will to purchase. Beside the cultural attraction, other points cannot be ignored neither - such as, location advantage. The globalization process and the transformation of US cities from industrial to post-industrial economy had increased working opportunities in serviced-based industry. The "white-collar" middle-class is the product of such economic situation. The globalization made big cities become the networked pinpoints and the command center of global economic operation. Under such extreme competitive situation, time and distance meant money and efficiency. Many "white-collar" employees moved to live in the declined areas close to their offices in the central business district. For this reason, SoHo was a good choice.
The development of luxury housing had also caused the boom of shop and catering businesses as well as tourism in SoHo. The increasing commercial atmosphere had pushed the land price dramatically. The gentrification process had forced many pioneering artists to move out due to the unaffordable price of housing. Most previous lofts are now trendy shops, pricy restaurants or expansive apartments. The 'Art SoHo' neighborhood is steadily eroded from the street pattern by commercial landscapes.
That is the development model of SoHo.
Part 03: Gentrification in Beijing 798 Art Zone
The gentrification phenomenon in China is rooted in the complex nesting of social, political, economic and cultural shifts. It is the result of multiple forces behind the surface. And again, culture and capital play the more significant role in the game.
Culture in the 798 case can be divided into two parts. One is the existing cultural value - the historical Bauhaus architecture, and the other is the cultivated cultural value gradually formed by the artists. However the cultivated culture had experienced a devaluation process through the commercialization of art products. And in the end turned culture value to commercial value.
In 798 site, history and reality, industry and the arts perfectly meet. The cultural value went to its peak in the first a few years after the settle of artists. Art galleries, artist studios, salons and museums transformed this abandoned industrial site to a dreamland of art and design. The name 798 Art Zone came into being.
Since this name was getting more and more famous, the actually art production and fine old industrial buildings had absorbed investment of commercial capitals. Shops and restaurants started to occupy the plots, and soon countless tourists rushed in from all over the world. 798 became one of the must-go spots in Beijing's cultural tourism. The consequence is big galleries and commercial institutes remained but pioneering artists moved out due to rental price. Some third-rate artists moved in selling cheap works. You can still see paintings and sculptures everywhere in 798, however they have nothing to do with art but money. The strong smell of commercialized products had replaced the pure taste of art. It seems more like a '798 Commercial Zone' instead of '798 Art Zone'.
This is the first round of absorbing capitals from its original cultural value, which happened within the art zone itself. The second round is occurring in the adjacent areas around 798 with capital investment both from the government and the developers.
798 Art Zone is located in the area called Wang Jing in northeast edge of Beijing in Zone 4. One major difference between Chinese and American urbanism is that, while in America, the development is going backwards to the city site from suburban; the Chinese model is to enlarge the city territory by expanding to suburban areas due to the saturation of land sources and the over-development of the city center.
In planning outline of Beijing, Wang Jing, where 798 Art Zone laid is marked for the new CBD (Central Business District) and high-tech companies especially communication and Internet industries. The government had proposed to build Zhong Guan Cun Science and Technology Electronic Park in 798 and its surrounding areas in 2002. Originally, all tenants in 798 factories should be evacuated by the end of 2005 in order to start construction. Through a long fight between the government and the artists, 798 Art Zone had been temporarily reserved, however still faced the risk of been demolished at some point in the future.
In the Chinese case, the national capital takes the fundamental effect in the process of urbanization. Different from the US system, in China, all land sources belong to the government. While the government only takes a guiding role in the US, the Chinese government actually takes direct actions by investing with national capitals to modify urban patterns.
On the other hand, the city planning strategy and investment of national capital also caused further investment from private developers.
Because of the urban set up of CBD and high-tech zone in the area, there are a lot of "white-collar" middle-classes living here, which makes Wang Jing as one of the main residential districts in Beijing. And this provides great opportunities for real estate developers.
Another significant factor to draw the capital from developers is the consumption concept of these "white-collar" middle-classes in China. In general, they share very similar character and taste with the new middle-class of the US in 1970s/1980s. The Chinese middle-class is formulating their new lifestyle. They choose to live close to work in order to achieve the best efficiency. They appreciate the value of culture. It is the new fashion to live in a cultural district to express their special taste. The only difference compared with the US situation is that they prefer to live in suburban area with a reasonable distance away from the city center in order to gain more living space in an affordable price. Clearly, these consumption views have pushed the production of large residential projects by the developer in this area, where perfectly match the new Chinese middle-class' preferred location and cultural requirements.
Overall, the input of both national and private capitals and the move-in of rich middle-classes in 798 surrounding areas had formed a besieging situation towards the art zone itself. And together with the inner commercialization process that happened in 798 Art Zone, the rental price of the studio space became extremely high. The artist community as the original cultural generator is forced to leave.
That is the unique gentrification process of the 798 case controlled by culture and capital in the Chinese urban context.
Part 04: Conclusion
The sixty years development of the 798 site reflects the Chinese social economic changes. The transformation of actual space represents the shifting urbanization patterns in Chinese cities.
Artists, government, city planners, developers and the middle-class all play significant roles in the gentrification process controlled by culture and capital factors. Similar to the SoHo model in the US, the 798 site has experienced developing stages from an iconic industrial district to an abandoned declined area, and to a vibrant art district, then finally to a commercial zone.
While cultural value works as the initial activator and intermediate transforming force, national and private capitals in this Chinese case are the termination factors leading the urban gentrification process of the 798 Art Zone. Eventually, the commercial value takes over the original cultural value. The art zone becomes the past.