The aim of this thesis is to investigate the present land and preservation policies in preservation and rehabilitation in China and to propose new methods of management for the historic urban districts and villages by answering the question “how to balance the benefits of different stakeholders and encourage them in preservation by policy changing and economic tools application”. The author chose Shanghai as the urban level case and Hongcun, Anhui Province as the rural level case to study the issue under the national urbanization and tourism trends. The thesis first outlines the current urbanization and historic heritage survival under the trend and further research in the current land policy and preservation policy and what role the non-profit organization is by applying flexible economic tools and policies. In a detailed central section the thesis describes the particular Lilong Housing’s situation in Shanghai, compares the existing two rehabilitation cases – Xintiandi and Tianzifang through the development methods, and research the tourism development mode in Hongcun. In conclusion, the thesis argues and recommends a public-private partnership mode could be the new preservation management method.