Urban renewal initiatives, numerous and wide-ranging across Chinese cities, are increasingly becoming a critical lever for improving public welfare and a substantial source of untapped investment potential, officials and experts said.

Minister for Housing and Urban-Rural Development Ni Hong said that China's urbanization is transitioning from a phase of rapid growth to one of stable development, while urban expansion is shifting away from large-scale, incremental growth toward a focus on improving the quality and efficiency of existing urban stock.

Urban renewal has been positioned as a key pillar in China's near-term economic and social planning, with the country's next five-year blueprint calling for its vigorous implementation and the recent annual Central Economic Work Conference emphasizing "high-quality advancement" of related projects in 2026.

Urban renewal is a massive, government-led initiative to upgrade aging cities, focusing on renovating old housing, improving infrastructure like pipes, transport, green spaces and revitalizing old factories.

Against a backdrop of complex and shifting external conditions, along with the need to further unlock domestic demand, urban renewal plays a vital role in stimulating investment, boosting domestic consumption and underpinning stable growth, said Xu Hongcai, deputy director of the economic policy committee of the China Association of Policy Science.

Last year, China carried out over 60,000 urban renewal projects and completed investments totaling 2.9 trillion yuan ($415.36 billion), effectively driving growth in upstream and downstream sectors such as building materials, home furnishings and smart equipment, data from the ministry showed.

Ni, the top housing regulator, said that efforts will be made to continue to upgrade underground pipeline networks and develop utility tunnels. The replacement of aging gas pipelines will advance as a regular practice, with the goal of renovating 30,000 kilometers of various types of gas pipelines this year.

Whether it's the upgrading of aging pipelines, the renovation of dilapidated buildings, or the enhancement of public spaces, urban renewal requires substantial financial support.

With projects often spanning years and involving complex logistics, the financial demands extend beyond what public budgets can shoulder alone, said Yang Baojun, president of the Urban Planning Society of China, and former chief economist at the Ministry of Housing and Urban-Rural Development.

"Overcoming the funding hurdles of urban renewal will require the concerted efforts of all stakeholders — the government, private sector and the public," Yang added.

In recent years, cities such as Beijing, Shanghai and Shenzhen have experimented with blended finance models, including public-private partnerships, real estate investment trusts focused on infrastructure, and targeted lending from policy banks.

Building a transparent, predictable investment framework will be crucial to drawing long-term private participation, especially for projects with moderate returns or longer payback periods, said Dong Yu, executive vice-president at Tsinghua University's China Institute for Development Planning.

China issued a guideline in mid-May to increase policy and financial support for urban renewal projects, vowing to establish a sustainable urban renewal model that is government-led, market-driven and publicly engaged.