Re-purposing the built environment of urban China: Residential eldercare and David Harvey's capital switching in a new era

Abstract

In urban China, institutional eldercare interacts with local land markets in ways that present special analytical problems in critical political economy. It is a new sector: home-based eldercare and childcare have formed complementary parts of intergenerational household strategies that are coming under system-wide pressure for the first time. Growth in Chinese institutional eldercare has increasingly contributed to the repurposing of a wide range of disused buildings, with noteworthy state encouragement. We read this post-reform feature of urban transformation to deploy David Harvey’s concept of ‘capital switching’ in new ways that are emerging in studies of China's urban geography. Harvey’s framework has already been used in analysing China’s multi-decade boom in the built environment. It exposed the stabilising effects of diverting capital from overaccumulation in single turnover and realisation cycles into deferred returns in the multi-cycle built environment albeit complicated by complex and distinctive interpenetrations of consumption fund and fixed capital, for-profit and not-for-profit sectors, state and non-state interests, and so on. This certainly speaks to the origins of contemporary Chinese urbanisation booms. But repurposing for institutional eldercare now appears to be playing a role in abating mounting overaccumulation and potential devalorisation in the built environment, pairing these unprofitable buildings with for-profit eldercare services operating and yielding profits in repeated single turnover cycles. We experiment with bundled commodity theory to understand repurposing buildings for residential eldercare in this new context.

Since the mid-1990s, a deep transformation of China's urban built environment has marked its emergence as a top industrial power. Massive foreign industrial investment triggered massive construction booms, especially along China's coasts, where whole ‘new towns’ emerged (Shen and Wu, 2017) and old ones were reinvented. Beyond construction expressing growth, state-led construction incentives repeatedly revived it, domestically and even globally. These developments gained extra attention because of China's unique political economy and its relationship with world capitalism. ¹

With Chinese growth now slowing and the construction sector in growing distress, China's political leadership has recently identified expanded residential eldercare, especially in its largest cities, as a top policy priority – a seemingly unrelated and equally surprising move that has triggered multi-level state action nation-wide (State Council, 2021). Included in that action were state directives to re-purpose buildings for eldercare where possible, rather than always build new.

The turn to Chinese residential eldercare is noteworthy in social policy terms alone. Relative to North American and European states, China had relied more heavily and longer on family-based eldercare at home, sometimes with paid help. Residential care typically served the relatively few city-dwellers without relatives or basic means. Even today, eldercare at home is a powerful norm, and residential care remains uncommon. Quite recently, the central government campaigned to reinforce these historic norms (People’s Republic of China Government Net, 2012). But rapid demographic ageing, the growing ranks of the very old with their complex needs, and family dispersion from urbanisation and out-migration have forced Beijing (and many Chinese families) to rethink residential care as among their very top concerns. The ambitious 2025 building targets that Beijing has since adopted will still supply a fraction of the total emerging need (State Council, 2021).

International social-scientific and policy literature typically analyse eldercare provision in relation to its clients’ needs alone. That orientation – however important – can limit our overall understanding: it neglects working conditions (often poor) or eldercare's ties to the wider political economy (often important). That limitation is especially important in the Chinese context.

Some recent Chinese policy documents have emphasised eldercare's wider implications to justify its new prioritisation, but rarely invoke eldercare's role in urban geography. More quietly, however, a discussion has emerged about repurposing buildings for eldercare, alongside building from scratch. New construction in city centres has proven too expensive, and peri-urban agriculture land too valuable. Because recent Chinese urban development and urban culture have so privileged new construction, this call for repurposing initially surprised us. It now appears suggestive to us, even if measuring the results is difficult and arguably premature. The new policy links residential eldercare to a new urban phase in China, when rapid construction and urban sprawl have abated, coastal cities are losing corporate occupants, and property markets seem fragile. This new context for eldercare requires new understandings, not merely new descriptions.

David Harvey's ‘capital switching’

The pragmatic and innovative Marxism of urban geographer David Harvey has influenced urban geographers and political economists studying China's urban boom, including Chinese colleagues. Here, we emphasise one influential element of Harvey's research, circuits of capital and ‘capital switching’. Drawing on others (Isard 1942; Lefebvre et al., 2003), Harvey's Urbanization of Capital (1985) emphasised that diverting capital into fixed capital and the consumption fund (a ‘secondary circuit’ of capital), especially in the built environment, can abate specific dangers of over-accumulation in a ‘primary circuit’. Chinese construction waves, especially in stimulus programmes, struck many experts as examples of this (Yin et al., 2018; Zhang et al., 2021; Zou et al., 2022).

Our first observation is that many commentators reduce Harvey's ‘primary-to-secondary’ capital switching to a flow from industry to construction – in other words, in relation to concrete sectors, not abstract circuits (e.g., Aalbers, 2011: 36; Beauregard, 1994: 716; Haila, 1988, 1991: 346; King, 1989: 446). This does point to something important, but one-sidedly and we think misleadingly. Our second observation is that most commentary stops at primary-to-secondary switching. That pattern, so crucial in China's recent history, now seems outmoded. Yet Harvey always accounted for multiple switching patterns: it is simply that different switching patterns now apply. Some recent works on China's urban geography have taken up this line. They warn of over-investment in China's built environment, or the secondary circuit (Yin et al., 2018; compare Harvey, 1985: 141). This new situation implies short-term under-accumulation, arguably the product of the very solutions that prior primary-to-secondary switching provided.

Which capital-switching pattern of Harvey's applies to the repurposing of disused buildings for eldercare? Second, what pattern would have to be true about that repurposing, according to his framework, for it to be functional for capital?

Harvey's three circuits

Harvey's (1985) discussion treated capital as an accumulation process expressed in city fabrics themselves. He described three distinct capital circuits, tracing the effects of capital flows amongst them. By our reading, the first two circuits – and arguably the third (see below) – are irreducible to economic sectors (see Christophers, 2011, 2014). Harvey clearly defined the first two by their temporal scale instead (1985: 6; Kutz, 2016: 1075). The primary circuit entails production and consumption processes that are completed in single ‘time periods’. The secondary circuit covers investments returned or depleted over multiple time periods; it, too, includes production (fixed capital) and consumption (the consumption fund).

The primary circuit is, we think, irreducible to industrial production. It is, in short, an abstraction, but in Marxist terms, a real one. For instance, fixed capital is normally involved in industry, despite being part of the secondary circuit. Likewise, nothing in Harvey's (1985) work confines the secondary circuit to the built environment alone (Harvey, 1985: 6). Finally, both circuits include production and consumption.

However, much reporting on Harvey's circuits simply replaces the original definitions with sectoral proxies, and most testing proceeds accordingly: industrial production replaces the primary circuit and construction, the secondary. Despite their rigour in other respects, this definitional move must qualify their conclusions. It also risks closing off wider connections. ²

By contrast with the first two circuits, Harvey's definition of the tertiary circuit seems to turn on four concrete fields: science, technology, health, and education (Harvey, 1985: 7–8). What unites them? Several accounts seem possible. (1) In Marxist economic terms, all four activities enhance forces of production: health and education, labour power; and science and technology, means of production. (2) Distinct traditions in the feminist political economy might group health and education under (a) ‘care economy’ or (b) ‘social reproduction’ (the latter especially in Marxist feminism). (3) Extending Harvey's temporal approach to the first two circuits, direct returns on all four tertiary-circuit activities seem longer-term and less certain than even the secondary circuit. That suggests state and non-profit suppliers, or (failing that) under-supply.

Harvey's third circuit and residential eldercare

If we think of health and education as elements of a care economy (Yeates, 2012), eldercare likewise involves emotional labour. But Harvey rarely attributes explanatory power to such features. If health and education belong in the circuit as social reproduction functions, narrow or broad interpretations could apply. Invoking Marx's reproduction schemas, health and education narrowly reproduce labour power. Here, eldercare does not fit: though paid eldercare does free up labour power from unpaid care work at home, few of its clients return to the paid workforce. Invoking Marxist feminist accounts of social reproduction instead would include (among other things) the reproduction of social roles and hierarchies. Eldercare's highly differentiated service packages for clients can indeed reproduce highly stratified societies, while also serving seniors’ diverse and changing material needs (see below). Alternatively, eldercare might fit the tertiary circuit in temporal terms. Long and uncertain periods surely pass, before a for-profit consortium re-coups investment on a new residential care facility. Indeed, Chinese policymakers have openly worried about this (60 Plus Eldercare Service Platform 2020; Ma 2020).

We generally prefer the fourth, temporal definition, following Harvey's approach to the other two circuits. But if eldercare belongs in the tertiary circuit, repurposing buildings for it has definite negative macroeconomic effects. If over-investment prevails in the secondary circuit, repurposing buildings for the tertiary circuit would deepen the general squeeze on short-term accumulation, the returns on their new uses being even longer-term and less certain than secondary circuit returns.

But reading eldercare into tertiary-circuit investment makes some unwarranted assumptions in our neoliberal age (Harvey, 2005) and about China. First, when Harvey wrote in 1985 about the tertiary circuit, he might have reasonably assumed not-for-profit supply. Yet much tertiary circuit activity now happens for profit, if at all. Chinese policy documents today appear determined to create a for-profit residential eldercare sector, and for-profit elements appear in most such projects (Strauss and Xu, 2022).

Second, the lines between state-based, not-for-profit, and for-profit institutions are distinctively blurred in China (Strauss and Xu, 2021). China's institutional eldercare policy currently privileges mixed-ownership models: publicly owned and operated; publicly built and minjian (‘non-profit’) operated; and privately owned and operated (usually for a narrow elite). Furthermore, while only minjian registrants can bid on contracts for publicly built facilities, for-profit companies can and do register for minjian status. Contracting out elements of eldercare operations theoretically cuts government costs, while also launching a new for-profit industry. New public management techniques that China has long adopted also insert profit motives in the public sector components.

Third, where not-for-profit or state agencies participate in eldercare projects, we find it significant that for-profit players cluster around service provision. (The few fully private packages commonly involve multiple firms.) International firms especially focus on labour-intensive, specialised services, such as memory support for dementia. Government underwrites these for-profit interests with its own infrastructure, operating subsidies, and tax breaks (Strauss and Xu, 2022).

Eldercare as ‘bundled commodities’

All this complicates the idea that eldercare provision is a single commodity. In fact, markedly varied interests bring the elements of most Chinese eldercare projects to the table: buildings, medical services, and personal services. Those interests also bring the three different circuits to the table (see below): stakeholder origins, current ownerships, and reproduction periods are markedly diverse.

In sum, a full residential eldercare package, including the physical facilities and the varied services, typically operates as a ‘bundle’ of commodities in contemporary China. By ‘bundled commodities’ (Adams and Yellen, 1976), we mean commodities produced in different processes and bundled together mainly for marketing. First, bundling enables capitalists to sell highly differentiated but related products in single marketing campaigns. This exploits a wide range of consumer tastes and purchasing power. China's eldercare is certainly highly differentiated in this way, even in single facilities, and many institutions serve sharp client differences in both income and need. In this sense, it reproduces modern China's highly segmented society.

But the term ‘bundled commodities’ also captures the highly divergent turnover times for the elements of residential care provision. That is our main interest. Many complex commodities arise from diverse components that diverse firms produce, but the diverse production processes are coordinated through intentionally managed commodity chains or networks. But in eldercare today, key elements include those – such as repurposed buildings – that were never created for eldercare. Moreover, multiple ownerships over multiple components continue to operate on a single eldercare site throughout service ‘delivery’.

Consider now the place of eldercare services in this ‘bundle’. Some commodities in the eldercare bundle are indeed long-term or uncertain investments (i.e. tertiary circuit): new buildings, for instance. But in all but the most elite ‘membership-based’ packages, the provision of services, their labour-intensive work process, and their regular, short-term payment schedules more closely resemble the primary circuit. These are produced, paid for, and consumed over short periods. And to repeat, these services come disproportionately from for-profit participants.

All this has wider implications. If eldercare is of the tertiary circuit, diverting capital into it may be necessary social policy, but offers little macro-economic relief from over-investment in the secondary circuit. If anything, such switching should further squeeze primary-circuit returns. Such a contradiction is hardly unthinkable. But disaggregating the eldercare package complicates that analysis. The short temporal cycles of for-profit eldercare service provision suggest Harvey's primary circuit, not the tertiary.

This leads to the present article's main functional claim: China's new building acquisition guidelines for eldercare may abate wider risks mounting from over-investment in the secondary circuit. They bring disused buildings into new functions, and more to the point, freshly conjoin them with newly profitable primary-circuit activity.

Of course, we do not claim that repurposing buildings for eldercare alone can offset these tensions in China's wider economy. Harvey's framework suggests instead that repurposing of buildings in for-profit service provision may deserve attention more generally, and that a wider scan for other repurposing trends would be valuable.

If this stands, it remains to investigate whether this merely aids primary circuit profitability, or also recovers value from the repurposed buildings. Fixed capital valuation is a thorny problem in Marxist and mainstream analyses (Harvey, 1982: 219–223, 2013: 138–141). At least two accounts seem possible. One is that repurposing ‘revives’ the value embedded in these buildings during their original construction. Their new function supporting for-profit eldercare services would release this value back into the larger economy as depreciating fixed capital. The other option is that the value of the disused buildings is lost, but recovering the use of the buildings allows eldercare package providers to command a market price for the package, a price set on the assumption that a building was newly constructed. The promoters using repurposed buildings would capture the difference. We intend to explore these alternatives elsewhere, exploring fixed-capital applications of joint product theory, and value transfer to non-productive activities (see Harvey, 1982: 63–68, 71–72, 213–215, 350–353, 2013: 138–141).

Conclusion

Repurposing buildings for Chinese eldercare obviously solves multiple practical problems. But its wider implications deserve more attention. Harvey's framework suggests some implications for the built environment.

Repurposing buildings for eldercare, construed as a tertiary circuit package, would seemingly intensify the profit squeeze from an emerging general over-investment in the secondary circuit. In some respects, eldercare fits the tertiary circuit. However, in a mixed, for-profit institutional environment, its service elements more nearly resemble the primary circuit. Conducting these services in repurposed buildings lends the buildings new uses. It may even recover lost value in them, and contribute to the restoration of primary circuit profitability. Generally, David Harvey's capital switching framework remains useful in China's new context, as it was (we believe) in a previous one.