The People’s Republic of China was unusual among low-income countries in that it did not develop large, uncontrolled illegal settlements. In part this was because of restrictions on urbanization, so that the urban population stayed relatively low as a proportion of the total, and partly due to the greater capacity of the communist state to control activities compared to the capitalist Lesser Developed Countries (LDCs). Since economic reforms were adopted in 1979, illegal building has increased substantially, with illegal land use accounting for about 10 percent of the total changes in land use between 1993 and 1999 (Tang and Chung 2002:47). However, the nature of this illegal use has very distinctive features related to the unusual characteristics of reform China. In this chapter, we draw on comparisons with another territory with a Chinese population, Hong Kong, to clarify the specific features of the illegal building situation in contemporary China. The comparison will also be used to provide some insights into the political economy of irregular forms of urbanization.