Clans as social capital in Wenzhou's in situ urbanization: exclusive or inclusive development?

Rural industrialization and thus in situ urbanization have been one of the main driving forces for the national development of China as a developing country. This paper focuses on Liushi, a township in Wenzhou, as a case study to elaborate on how the social capital of traditional clans coordinates rural industrialization through industrial collaboration that is evolved from agricultural cooperation. Development of Liushi is characterized by peasants' mass participation in business start-up and informal finance, both of which are mediated by the informal institution of clans, and the formation of industrial value chains based on the long-term rural social trust. It is discovered that the functional relationship between the Skinner's town market system and its affiliated villages is instrumental in the progress of rural industrialization. In the course of in situ urbanization, village spaces are stratified and town spaces fragmented. Newly constructed spaces are created by locals and may not be inclusive to non-local migrants. Segregated urbanization generates industrial townships instead of cities. Exclusivity of clans is retained as a traditional construct of rurality. • This paper is about rural development based on the traditional clans as informal institution and social capital. • The valuable and potential contribution of this paper is that it unveils how the clans as rural social capital mediates between informal finance and industrialization that engages peasants' mass participation in enhancing their quality of life. • During in situ urbanization, village spaces are stratified and town spaces fragmented. The newly constructed spaces (stratified village spaces and fragmented town spaces) are found exclusive to locals and may not be inclusive to non-local migrants.