The process of absorbing villages into urban areas in China is of major significance and can follow several paths. Specifically, the dual urban and rural characteristics of villages located close to cities provide new opportunities and constraints for active community engagement. This paper examines two related options through case studies in Kunming, Southwest China, and the interface between the urban and the rural in peri-urban studies. One village was transformed from a collective landholding system into a village shareholding company. In this case, villagers’ self-construction and redevelopment activities significantly changed the built environment in the settlement. The second village
was transformed into a new urban residential community by property developers. In this process, villagers also had their hukou [household registration] status altered from ‘rural’ to ‘urban’. The study illustrates the variable transition processes between rural and urban in this particular region and highlights the relationship between villagers and their surrounding environment. It is argued that peri-urban spaces in Southwest China retained their distinctiveness and certain rural characteristics despite the integration through the urbanisation process, and that the relationships between villagers and their surrounding built environment are constantly being re-appropriated and reinvented.