As we have seen, the economic reforms of the 1980s resulted in the broad withdrawal of the state from the private affairs of the urban population, which also included the provision of basic social security services. At the same time, economic change heralded social change, which in urban China found its expression in increased mobility and the fragmentation and differentiation of local neighbourhoods. The combination of these developments resulted in a situation in which social tensions increased to an alarming level. This called for institutional reforms. In this chapter, we fortify our argument that shequ reorganization was an expression of the Party-state’s attempt to increase its infrastructural power over society with the dual aims of better providing social services, and providing a basis for the top-down construction of new urban communities. In particular, we hold that these reforms had three inter-related goals: first, the reorganization of social welfare provision, which had in several places been significantly reduced after the disintegration of the ‘work unit’ (danwei); second, the improvement of social stability and social control, which, as we have seen, had worsened with the retreat of the state and the fragmentation of society, especially in the 1990s; and third, these goals were to be achieved without too great an increase in the financial and organizational burden of the central government, at least in the long run. In addition, by cutting the management of urban problem groups into smaller geographical units, the shequ also facilitate top-down control. The following sections introduce the institutional setup and organization of China’s urban community organizations and the tasks they are ordered to fulfil, as well as their financial structure. It will become clear that participation and empowerment are not invoked for their own sake, but are clearly directed at solving the problems outlined in the previous chapter. Finally, the chapter would be incomplete without at least a short introduction to associational life in residential areas and the semi-autonomous homeowners’ committees. While the former (associations) are not autonomous, but rather embedded in the formal structures of the Residents’ Committees (RCs), the latter clearly pose a challenge to formal shequ structures.