This is a wall inside the siheyuan where Nai Nai (Shanshan’s paternal grandmother) lives. The rest of what was once a large hutong has been leveled, presumably to make way for a five-star hotel complex. (The siheyuan is located well within the Second Ring Road, which makes it very valuable real estate.)
The siheyuan, where Shanshan spent the first three years of her life, was spared because of special circumstances regarding some of the (mostly elderly) people living there.
We don’t know what will happen to the property in the future.