I spent a lot of time in Hangzhou around the turn of the century. This report from the Guardian sounds perfectly plausible to me. China of course has no real property rights, and if they want to show up and bulldoze your building to expand a road (or otherwise for 'the common good'), well, you're just out of luck. You can live in the rubble until you find something better, maybe. So, yes, I'm completely prepared to believe that the Communist Party forced a third of the city's residents to leave for the week.
The article's pictures don't show the pretty parts of Hangzhou, though, just the post-Commie industrial architecture. Hangzhou was a capital during the Southern Song dyansty, and is full of temples and statuary around the beautiful West Lake (Xi Hu). We used to climb Precious Stone Hill and overlook the lake frequently, or take hikes in the tea country near the Dragon Well.
Unfortunately, the massive air pollution from the coal plants that power the city have done a great deal to harm the city's beauty (as well as the health of anyone living there). Still, you can get the sense that it was once very lovely, and almost is still.
Google has many better images of the place. If anything, this collection errs in the other direction. I noticed when I lived there that I had carefully cropped out all the huge piles of trash and rubble from my pictures, all the ugly stuff of Communism, to try to capture just the beautiful things. I went around and took a bunch of photos of that awful stuff as well, so that I wouldn't forget what the city was really like. It is beautiful, almost, in places. But that beauty exists beside incredible ugliness and damage. Parts of Hangzhou looked worse than Baghdad, as even a war in a merely socialist state cannot do damage like peace in a fully Communist one. Such a government destroys merely by its ordinary existence, both directly and indirectly. Unfree to hold any part of it as their own, the people finally give up caring about it.