This article examines the rationale behind municipal and local governments' pursuance of urbanization, and the political and socio-economic implications of the policy to move villagers from their farmland into apartment blocks in high-density resettlement areas, or “concentrated villages.” It provides evidence of an increasing reliance by municipal and local governments on land revenues and the financing of urban infrastructure by the governments' land-leasing income. Following their relocation to apartment blocks, villagers complain that their incomes fall but their expenditures rise. Moreover, although they cede rights to the use of their farmland to the government, they are not given access to the state-provided social welfare to which urban residents are entitled. The paltry compensation which they receive for their land is insufficient to sustain them. Displaced or landless peasants are emerging as a distinctly disadvantaged societal group, deprived of the long-term security of either farmland or social welfare. The question of whether or not rural land rights should be freely traded is not as crucial to the future livelihoods of landless peasants as allowing them access to the full range of social welfare afforded to urban residents.