This paper aims to understand the formation of poor neighbourhoods through examining the transformation of a suburban industrial district into a poverty neighbourhood in the city of Nanjing. The notion of a poverty of transition is developed to show how such a transformation occurs in the aftermath of state-led industrialisation. It is argued that, rather than simply being attributable to marketisation, the driving-forces include a set of institutional changes that work together to pave the way for the development of poor neighbourhoods: deindustrialisation drives industrial workers and the self-employed at the margin into a poverty trap; self-exploited and hardworking rural migrants, not covered by official welfare support, are becoming the working poor; housing privatisation serves to convert low-income households into homeowners of low-capitalised assets; the new minimum living standard regime contains the poor and maintains the stability of poverty neighbourhoods.
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