Chapter 4

Urban Renewal Policies and Flexible Stone Market Opportunities

Compiled by Guangdong Fortune Stone New Material Co., Ltd.

Key Points

• Urban renewal policies have moved from shantytown demolition and reconstruction toward organic renewal, making the facade retrofit exterior wall market a policy-driven incremental market.
• The four major tools of fiscal, financial, land, and standard policy, together with the three mechanisms of safety, energy conservation, and green procurement, constitute the main channels for flexible stone to enter the facade retrofit market.
• Flexible stone enterprises should take green product certification as the foundation, and through demonstration projects, social capital connection, and standard participation, transform policy opportunities into sustained orders.

4.1 The Evolution Logic of Urban Renewal Policies

To understand current policies, one must first understand where they came from. China’s urban renewal policies have gone through three stages, each corresponding to a different urban development logic and a different exterior wall material ecosystem.

4.1.1 Shantytown Renovation (2010–2020)

The core logic of this stage was “demolition and reconstruction.” Policy tools were mainly large-scale demolition and reconstruction, and funding sources were mainly government-led land transfer and shantytown renovation special loans. Exterior wall material demand was concentrated in new building facing, with ceramic tiles and coatings as the absolute mainstream; existing building renovation demand was largely replaced by demolition and reconstruction, and flexible stone had almost no market entry point.

4.1.2 Old Residential Area Renovation (2021–2025)

During the “14th Five-Year Plan” period, the national plan was to renovate 219,000 old residential areas, involving a construction area of about 3 billion square meters. The core logic of this stage shifted from “demolition and reconstruction” to “rectification”—no large-scale demolition and reconstruction, but repair, reinforcement, and functional improvement of existing buildings. In 2025, 27,100 urban old residential areas were newly started for renovation nationwide, benefiting 4.99 million households, with completed investment of 133.2 billion RMB, exceeding the annual plan[1].

The central government established a special subsidy for old residential area renovation: the total subsidy per city in the eastern region does not exceed 800 million RMB, the central region does not exceed 1 billion RMB, and the western region and municipalities directly under the central government do not exceed 1.2 billion RMB. The subsidy scope gradually expanded from early infrastructure construction to exterior wall renovation, energy-saving renovation, and other fields.

What does this shift mean for flexible stone? The policy explicitly states “no large-scale demolition and reconstruction,” the path of “removing walls and redoing” is restricted, and the path of “no wall removal, low disturbance” is encouraged. Flexible stone’s thin-set process does not remove old substrates, is lightweight, and produces little waste, exactly conforming to this policy direction.

4.1.3 Urban Renewal Action (2025 to Present)

In 2025, urban renewal expanded from the single dimension of old residential area renovation to a systematic project covering eight major dimensions: existing buildings, old residential areas, complete communities, old streets, old factory areas, urban villages, urban infrastructure, ecosystems, and historical and cultural protection[2].

The policy characteristics of this stage show three shifts.

First, from “engineering construction” to “full life cycle management.” The policy requires the establishment of a full life cycle safety management system for building use, imposing higher requirements on material durability and maintainability.

Second, from “government-led” to “multi-party participation.” The policy encourages social capital to participate in urban renewal, promoting new mechanisms for government and social capital cooperation and infrastructure REITs.

Third, from “large-scale demolition and reconstruction” to “organic renewal.” The policy explicitly states “no large-scale demolition and reconstruction” and “no vanity projects that waste people and money,” emphasizing adaptation to local conditions and acting within one’s means. This principle directly limits the use of high-cost, high-disturbance materials, creating a policy window for lightweight, fast, and economical exterior wall renovation schemes.

Table 4-1 Comparison of the Three Stages of Urban Renewal Policies

Case: A Residential Area Shifting from Shantytown Renovation to Rectification

A residential area built in 2000 in a northern city was originally planned to be included in shantytown renovation for demolition and reconstruction, but was later included in the old residential area renovation scope due to policy adjustments. The original demolition scheme was completely scrapped, the renovation budget was significantly compressed, and the exterior wall scheme changed from “remove walls and reapply ceramic tiles” to “retain substrate and apply flexible stone thinly.” The project completed renovation without relocating residents, the schedule was shortened by half, and construction waste was reduced by about 80%.

Case insight: Policy switching directly changes material schemes. Under demolition logic, flexible stone has no entry opportunity; under rectification logic, light-intervention materials become the preferred option.

4.2 The “Four Major Toolboxes” of Urban Renewal Policies

Urban renewal policy is not a single tool, but a “toolbox” containing four major tools: fiscal, financial, land, and standard. Only by understanding the operating logic of each tool can one understand where flexible stone’s market opportunities come from.

4.2.1 Fiscal Tools: Central Finance “Four Taels Moving a Thousand Catties”

Fiscal tools are the most direct and effective tools in urban renewal policy. In 2025, the National Development and Reform Commission allocated 80 billion RMB in central budget investment for urban renewal. The central government provided fixed subsidies to some cities for urban renewal actions for three consecutive years; in 2025, the first batch of 15 supported cities was announced, including Jincheng, Ningbo, and Shenzhen[3].

The operating logic of fiscal tools is “guidance”: central funds do not bear the full investment of the project, but serve as a “primer” to leverage local fiscal and social capital. Subsidy funds are mainly invested in two directions: key model area construction and mechanism construction.

The significance for flexible stone is: projects supported by central finance usually have demonstrative nature. Once a project is listed as an urban renewal demonstration project, its exterior wall material selection will become an industry reference sample for subsequent projects.

4.2.2 Financial Tools: Special Bonds, Ultra-Long Special Treasury Bonds, REITs

Financial tools are the “main artery of funds” for urban renewal. The policy clearly states that eligible projects will be supported through ultra-long special treasury bonds, and eligible urban renewal projects will be supported through the issuance of local government special bonds under the premise of controllable debt risk[2].

In terms of special bonds, in the first three quarters of 2025, 63.2 billion RMB of special bonds were issued for urban old residential area renovation, and 81.6 billion RMB of special bonds were issued for urban village renovation, a year-on-year increase of 1.4 times; nearly 450 billion RMB of special bond funds were invested in urban renewal projects throughout the year.

In terms of ultra-long special treasury bonds, support focuses on urban underground pipeline renovation and old residential elevator installation and renewal. Taking Wenzhou as an example, in 2025, two batches of ultra-long special treasury bond funds totaling 336 million RMB were obtained, specifically for supporting the renewal of residential elevators over 15 years old, benefiting 2,222 residential elevators.

In terms of REITs, in 2025, the National Development and Reform Commission added “urban renewal facilities” to the list of infrastructure REIT project industry scopes; old factory area renewal and renovation projects can revitalize existing assets through REITs, providing exit channels for social capital[3].

Table 4-2 Comparison of Urban Renewal Financial Tools

4.2.3 Land Tools: Planning Relaxation and Space Revitalization

Land tools are a major breakthrough in urban renewal policy in 2025, “relaxing” urban renewal from four dimensions[5].

First, enhance detailed planning adaptability. Detailed plans for areas to be subject to urban renewal can be evaluated and optimized, and original detailed plans can be optimized through technical corrections and optimization adjustments, making the planning approval process more flexible.

Second, optimize transitional period support policies. Those using existing land and property resources to develop industries supported by the state can enjoy transitional period policies of no more than 5 years, during which the land use subject and planning conditions are not changed.

Third, promote temporary use of existing land and space. Rules for temporary use of idle construction land can be formulated, as well as management and control rules for temporary use of existing buildings (structures) without increasing floor area ratio and height.

Fourth, encourage combined supply and overall operation of resource assets. Establish a mechanism for combined supply and overall operation of multiple categories of resource assets within a specific spatial scope.

The significance for flexible stone: Land relaxation means that the types and scale of urban renewal projects will expand significantly. Projects such as old factory area conversion to creative parks, old street revitalization and renewal, and temporary use of existing buildings place more emphasis on “design sense” and “appearance coordination.” Flexible stone has rich colors and customizable textures, exactly adapting to the design needs of such projects.

4.2.4 Standard Tools: Expansion of Green Building Materials Government Procurement

Standard tools are the tools most directly related to flexible stone in urban renewal policy. In January 2025, the Ministry of Finance, the Ministry of Housing and Urban-Rural Development, and the Ministry of Industry and Information Technology jointly issued a notice that, effective January 1, 2025, the implementation scope of the government procurement policy supporting green building materials to promote building quality improvement will be expanded to 101 cities (municipal districts) nationwide[4].

Key clauses include:

First, projects included in the scope. Government procurement engineering projects such as hospitals, schools, office buildings, complexes, exhibition halls, convention and exhibition centers, gymnasiums, affordable housing, and old city renovation projects are all explicitly included. The inclusion of old city renovation projects in the green building materials government procurement scope is a direct policy interface for flexible stone to connect with government procurement.

Second, mandatory and optional category management. Those belonging to the “mandatory category” of the Government Procurement Demand Standards for Green Buildings and Green Building Materials (2025 Edition) shall all procure and use green building materials that meet relevant standards; those belonging to the “optional category” shall have a selected variety not less than 40% of the building material varieties involved in the building project.

Third, supplier requirements. Green building material suppliers shall issue documentary evidence that products meet demand standards when supplying, including green building material product certification certificates uniformly promoted by the state, or valid test reports that meet demand standards.

The significance for flexible stone: This is the most direct policy window for flexible stone market opportunities. Flexible stone products have obtained China Green Product Certification and have the basic conditions to enter the green building materials government procurement catalog. In government procurement projects in the 101 policy implementation cities, flexible stone can directly participate in bidding as an “optional category” green building material, gaining a green threshold advantage in bid evaluation.

Table 4-3 Connection Points Between the Four Major Urban Renewal Policy Tools and Flexible Stone

Case: A Government Procurement Project for Affordable Housing Exterior Wall Renovation

In a certain district in East China, affordable housing exterior wall renovation was included in government procurement engineering. The original scheme planned to use ordinary coatings. At the design review stage, according to the Government Procurement Demand Standards for Green Buildings and Green Building Materials (2025 Edition), facing materials were required to provide green building material certification or test reports. The construction party switched to flexible stone that had obtained China Green Product Certification, counted it as an optional category material in the green building material selection ratio, and smoothly passed drawing review and acceptance.

Case insight: Standard tools are not “advocacy” but procurement thresholds. Without green certification, flexible stone cannot even obtain bidding qualification; with certification, price and process competition can begin.

4.3 The “Driving Mechanisms” of Policies on the Flexible Stone Market

Policy is not a document; it is a mechanism. Only by seeing how policy works can one know where flexible stone’s opportunities fall in the chain.

4.3.1 Safety Regulation: Policy Forcing of Ceramic Tile Detachment

Many places have issued policies restricting or prohibiting the use of ceramic tile facing on high-rise buildings. The logic behind this policy is public safety: ceramic tile detachment and injury accidents occur frequently, and the government must reduce risks through regulatory means.

The driving mechanism of safety regulation on flexible stone is the “substitution effect”: when ceramic tiles are banned or restricted, the market needs alternative materials. Flexible stone’s self-weight is only 1/5 to 1/10 of ceramic tiles, detachment risk is greatly reduced, fire rating can reach B1 to A2, and it is one of the preferred compliant alternatives.

The sustainability of this driving mechanism is the strongest. Safety regulation is bottom-line regulation and will not be easily relaxed once issued. As more cities issue ceramic tile restriction policies, flexible stone’s substitution space will continue to expand.

4.3.2 Energy Conservation Regulation: Policy Pull of Exterior Wall Energy-Saving Renovation

Urban renewal policy clearly requires continued promotion of energy-saving renovation of existing residential and public buildings and strengthening of building insulation material management. In 2025, the first CCER methodology in the building field was officially released, focusing on improving the envelope performance of public buildings, explicitly including “adding or replacing exterior wall insulation” in the scope of emission reduction projects.

The driving mechanism of energy conservation regulation on flexible stone is the “supporting effect”: energy-saving renovation usually involves exterior wall insulation system renewal, and flexible stone is used as the facing layer of the insulation system, forming an integrated “insulation + facing” scheme. Flexible stone’s lightweight characteristics do not add excessive load to the insulation system, and the thin-set process can adapt to the flatness deviation of the insulation layer surface.

4.3.3 Green Procurement: Policy Dividend of Green Building Materials Government Procurement

The expansion of green building materials government procurement is the most direct market driving mechanism for flexible stone. In government procurement projects in 101 policy implementation cities, old city renovation projects are explicitly included. Flexible stone has obtained China Green Product Certification and has the conditions to enter the green building materials procurement catalog.

The driving mechanism of green procurement on flexible stone is the “threshold effect”: government procurement projects must use a certain proportion of green building materials, and flexible stone no longer needs to compete purely on price with “non-green” products, but enters a segmented market with a green threshold. In this market, green certification becomes a competitive advantage rather than a cost disadvantage.

Table 4-4 The Three Driving Mechanisms of Policies on Flexible Stone

Case: Green Procurement Access for a Facade Retrofit Project

In a southern city residential community exterior wall renovation included in government procurement engineering, the bidding documents required a green building material selection ratio of not less than 40%. At the bidding stage, ordinary coatings could not be counted in the ratio due to lack of green certification; the flexible stone scheme was counted in the selection ratio with China Green Product Certification and passed drawing review. The project ultimately adopted a “flexible stone thin-set + local insulation repair” scheme, with a cost close to the coating scheme and significantly better durability expectations.

Case insight: The green procurement mechanism turns certification from a “bonus item” into an “entry ticket.” Without green certification, enterprises can only be shut out of government procurement.

4.4 The “Four Paths” for Flexible Stone Enterprises to Connect with Policy Dividends

Policy dividends will not automatically fall on enterprises. Flexible stone enterprises need to proactively connect with policies and transform policy opportunities into project orders.

4.4.1 Obtain Green Product Certification and Enter the Government Procurement Catalog

Green product certification is the “passport” for flexible stone to enter the government procurement market. Certification is not the endpoint; certification needs to be further transformed into bidding advantages.

Operation points: Ensure the certification certificate is within the validity period and covers core product models; proactively provide certification certificates in bidding documents and mark the certification coverage; for the 101 policy implementation cities, understand in advance the specific requirements of the local Government Procurement Demand Standards for Green Buildings and Green Building Materials; for “mandatory category” materials, confirm whether flexible stone is included; for “optional category” materials, ensure the selection ratio meets standards.

4.4.2 Participate in Demonstration Projects and Accumulate Benchmark Cases

Material selection for urban renewal demonstration projects supported by central finance often becomes a reference for subsequent projects. This is the project type most worth striving for for flexible stone enterprises.

Operation points: Pay attention to the list of urban renewal demonstration cities and key project lists announced by the Ministry of Finance and the Ministry of Housing and Urban-Rural Development; intervene in the early planning stage of demonstration projects and communicate with design institutes on flexible stone system practices; provide life cycle cost comparisons, carbon footprint accounting, and other data to support the “demonstrativeness” argumentation of demonstration projects; after project completion, systematically organize case data to form replicable and promotable benchmark cases.

4.4.3 Connect with Social Capital Projects and Expand the Non-Government Market

Urban renewal policy encourages social capital participation, and tools such as REITs provide exit channels for social capital. Social capital does not only look at “policy compliance,” but values return cycles and asset appreciation more.

Operation points: Pay attention to the exterior wall renovation needs of urban renewal REIT underlying assets; establish contacts with urban renewal funds and industrial investment institutions to understand project reserves;针对 the decision-making logic of social capital, provide “value argumentation” for flexible stone: appearance improvement brings rent increases, life cycle cost lower than traditional materials, low maintenance cost.

4.4.4 Participate in Standard Formulation and Strive for Rule Discourse Power

Standard tools are the entry point that flexible stone enterprises should invest in for the long term. Participating in standard formulation is equivalent to writing one’s own technical accumulation into industry rules.

Operation points: Participate in the formulation or revision of flexible stone-related clauses in green building material certification standards; participate in the compilation of local standards such as “Exterior Wall Facing Material Selection Guidelines” for urban renewal projects; transform formula, bonding, and node finishing experience into standard clauses; establish industry cognition of the “flexible stone category” through standard formulation, preventing un certified low-priced products from disrupting the market with inferior quality.

Table 4-5 Four Paths for Flexible Stone Enterprises to Connect with Policy Dividends

Case: A Flexible Stone Enterprise Participating in the Compilation of Local Guidelines

A flexible stone enterprise participated in compiling the Urban Renewal Exterior Wall Facing Material Selection Guidelines for its province, writing thin-set processes, node practices, and substrate determination indicators into the guideline clauses. After the guidelines were released, multiple urban renewal projects in the province selected materials according to the guidelines at the design stage, and the enterprise entered the project shortlist by virtue of its participating status and product certification, forming sustained orders.

Case insight: Participating in standard compilation is a key action to upgrade single-point project advantages to industry rule advantages. What standard-participating enterprises obtain is not one-time orders, but sustained market access convenience.

4.5 Policy Trends and Flexible Stone Strategic Response

4.5.1 Accelerating Urban Renewal Legislation

In 2025, Shenzhen has issued urban renewal regulations, Guangzhou has issued urban village renovation regulations, and Guangdong Province is also promoting urban renewal legislation at the provincial level. Legislation means that urban renewal moves from “policy promotion” to “rule of law guarantee,” and the stability and mandatory nature of policies are significantly enhanced[6].

Strategic response: Flexible stone enterprises should pay attention to provisions on exterior wall materials in local urban renewal regulations and plan compliant products in advance. After legislation, market entry thresholds are higher, but competition is more orderly.

4.5.2 Continuous Expansion of Urban Renewal Fund Scale

A total of 28 cities nationwide have established urban renewal funds, with a total scale of 455 billion RMB, and the scale is expected to further expand during the “15th Five-Year Plan” period. The expansion of fund scale means that funding guarantees for urban renewal projects will be more sufficient, and project implementation speed will accelerate.

Strategic response: Flexible stone enterprises should study the investment preferences and project screening standards of urban renewal funds, and provide targeted technical solutions that conform to fund investment directions.

4.5.3 Continuous Strengthening of Green Building Materials Policies

The scope of green building materials government procurement has expanded from a few pilot cities to 101 cities and may further expand in the future. Green building materials certification will become “standard configuration” for urban renewal projects.

Strategic response: Flexible stone enterprises should regard green product certification as “basic configuration” rather than a “bonus item.” At the same time, pay attention to higher-level green certifications such as carbon footprint accounting and environmental declarations, preparing for connecting with international markets and high-end projects.

Case: An Enterprise Entering the Shortlist of a Demonstration Project with Green Certification

A flexible stone enterprise completed green product certification early and accumulated a complete document chain in first-tier city facade retrofit projects. In 2025, when the city applied for an urban renewal demonstration project, the design institute selected materials according to green building materials procurement requirements, and the enterprise entered the supplier shortlist first due to its certification qualifications and existing cases, ultimately winning the exterior wall renovation bid section.

Case insight: The window period of policy trends is often very short. The three preparations of certification, cases, and document chain must be completed before the bidding announcement.

Decision Reference for Facade Retrofit Offices

Decision Matter

Whether the exterior wall material selection and procurement process of facade retrofit projects should connect with green building materials government procurement policies and adjust the material access catalog.

Situation Assessment

Urban renewal policy has moved from shantytown demolition and reconstruction to old residential area rectification, and then to urban renewal action; light-intervention and low-disturbance materials have gained an institutional window. The four major tools of fiscal, financial, land, and standard policy together constitute the policy toolbox, among which standard tools have the highest correlation with flexible stone—the scope of green building materials government procurement has expanded to 101 cities, old city renovation projects are explicitly included, and green certification has upgraded from a “bonus item” to an “entry ticket.” The three driving mechanisms of safety regulation, energy conservation regulation, and green procurement are superimposed: ceramic tile restriction policies release substitution demand, energy-saving renovation drives “insulation + facing” integration, and green procurement creates a segmented market with thresholds. Urban renewal legislation is accelerating, fund scale is expanding, and green building materials policies are strengthening; the policy fundamentals continue to improve.

Optional Paths

Path one: Continue using the traditional exterior wall material route—mature technology, but difficult to meet green building materials procurement ratio requirements, and ceramic tiles have an obvious elimination trend under high-rise restriction pressure.

Path two: Flexible stone enters the government procurement system with green product certification, accumulates benchmark cases through demonstration projects, expands the non-government market through social capital projects, and strives for rule discourse power through standard participation.

Path three: Implement classified strategies by project—government procurement and demonstration projects prioritize green certified materials, general projects maintain traditional schemes and gradually increase the proportion of green building materials used.

Decision Recommendations

It is recommended to include flexible stone in the facade retrofit exterior wall material selection catalog and participate in bidding as an “optional category” green building material in government procurement. At the enterprise level, it is recommended to advance on four fronts: first, ensure that green product certification effectively covers core product models; then strive for urban renewal demonstration projects to form replicable case materials; at the same time connect with urban renewal funds and REIT underlying asset projects to expand the non-government market; and participate in the compilation of local and group standards in the long term, transforming technical accumulation into rule advantages. Policy direction does not determine individual orders, but determines how wide the market door opens. Enterprises that prepare certification, cases, and document chains first will seize the initiative when bidding starts.

Risk Warnings

Policy window periods are often shorter than enterprises expect. Certification processing, case accumulation, and document chain construction all need to be completed in advance; if waiting until the bidding announcement is issued to prepare, opportunities will be missed. Green building materials procurement ratio requirements may increase dynamically, and enterprises must continuously maintain certification validity and track updates to local demand standards. Social capital projects are sensitive to return cycles; if life cycle cost argumentation cannot be provided, it will be difficult to move investors with “green certification” alone. In addition, the standard formulation cycle is long and investment is large, with short-term order returns difficult to see; enterprises should regard it as long-term capacity building rather than one-time compliance efforts. Acceptance indicators are implemented according to the unified standards throughout the book: bonding strength ≥0.4 MPa, hollowing rate ≤5%, flatness ≤3 mm.

Reflections on Stone, Insights on Fortune

Green product certification is flexible stone’s “entry ticket,” not a “decoration.” Policy dividends will not automatically fall on enterprises, but policy direction will definitely affect the market.

Translate documents into bidding actions, turn certification into bidding thresholds, and turn cases into industry references—only then can flexible stone enterprises truly capture policy dividends. The evolution of policy never follows the will of a single material, but the policy window always opens for those who are prepared.

As the compiling team, we believe: urban renewal is not only the renewal of buildings, but also the synchronous renewal of material logic and institutional logic. What flexible stone needs to do is not wait for policy, but understand policy, embed into policy, and participate in policy.

References

[1] General Office of the State Council. Guiding Opinions on Comprehensively Promoting the Renovation of Old Urban Residential Areas: Guobanfa [2020] No. 23[Z]. 2020.

23号[Z].2020.

[2] General Office of the CPC Central Committee, General Office of the State Council. Opinions on Continuously Promoting Urban Renewal Actions[Z]. 2025.

[3] Fixed Asset Investment Department of the National Development and Reform Commission. Urban Renewal Focuses on 23 Key Tasks[N]. People’s Daily, 2026-06-09.

[4] Ministry of Finance, Ministry of Housing and Urban-Rural Development, Ministry of Industry and Information Technology. Notice on Further Expanding the Implementation Scope of the Government Procurement Policy for Supporting Green Building Materials to Promote Building Quality Improvement[Z]. 2025.

[5] Ministry of Natural Resources, Ministry of Housing and Urban-Rural Development. Notice on Several Measures to Further Support Urban Renewal Actions: Ziranzi Fa [2025] No. 226[Z]. 2025-12-31.

[6] Standing Committee of the Shenzhen Municipal People’s Congress. Shenzhen Special Economic Zone Urban Renewal Regulations[Z]. 2021.