Concerning the role of urban village in the rental market, early renewal damages the immigration of the lower income groups, thus affect the supply of the primary labor force. Therefore, a right time of urban village renewal play an important role in labor flow which is a critical attribute to economy growth. Previous studies mostly focus on the urban planning and social problems in these areas. But this thesis will regard the urban villages as an indispensible part of the housing market especially in the transitional stage of Chinese economy which indicates a suitable renewal policy of urban village. In order to research on the role of the urban village, the sample analysis of urban village in Shenzhen is made. The thesis will evaluate the urban village’s role in different sectors, i.e. local government, house owner, tenant and the real estate developer, aiming to find a suitable justification to the urban village existence in current transitional society in China. The role of urban village is common problem in China and other emerging economies since the urban village is an inevitable phenomenon in the rapid urbanization. In the circumstance of low social welfare society, the urban village solves an exceptional part of housing problem.