About the Chinese solution you referred to: to a certain extent this is practiced in San Francisco, but it's not widespread. See for example this article [1] ab

About the Chinese solution you referred to: to a certain extent this is practiced in San Francisco, but it's not widespread. See for example this article [1] about the ParkMerced redevelopment, where existing tenants' rent control was grandfathered in to replacement units, with the developer getting their profit out of the remaining units. A similar (maybe more interesting from the public policy perspective) is the TAMA 38a/b system in Israel. For background, this is a market in which ownership of individual apartments in a condo arrangement is very common. Developers are allowed to renovate buildings to add floors and sell off the new units for their own profit, under the condition that they pay for renovation of the building to new safety standards (earthquake and bomb shelter), and usually whatever other upgrades the existing owners can squeeze out of them. It's kind of a use of the government's virtual "asset" of the economic benefits of easing zoning/height restrictions in order to pay for public safety/infrastructure improvements.