Solving the housing problem for urban low-income people is one of important issues of the housing policy and urban planning in China. Shanty towns which were left from old days are now the main housing source for low-income populations; therefore, shanty town reconstruction has been taken as a resolution for solving housing problems for low-income people. However, the current land policy, real estate development policy, urban planning laws and regulations are insufficient in solving the shanty town reconstruction difficulties and more likely become barriers of it. A number of indicators such as building density, per capita living space, land prices and floor area ratio are used to determine how successful the shanty town reconstruction being implemented. In this article, a flexible solution on political and regulatory basis for solving shanty town reconstruction difficulties will be proposed by systematically analyzing various economical and technical indicators.