26 January 2020

The Big Picture: HUKOU REFORM

China, which is seeking to upgrade its economic structure, is expected to step up efforts for the long-awaited reform of its “hukou” or household registration system after further discussions at the upcoming Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee between Nov. 9 and 12. The reform of household registration in China, which houses the world’s biggest population, can help reengineer the labor force as well as address the longstanding income inequality between rural and urban residents. The government is seeking to transform the economy into a services-oriented model, reducing the reliance on low-end manufacturing that had contributed to the rapid economic expansion in the past decades. Amid this situation, the upheaval of the existing household system can foster labor mobility, unleashing more human resources to help develop the underdeveloped western parts of the nation. For cementing social stability, the initiative can also foster fairer wealth distribution, allowing more people to enjoy the fruits of economic growth and avail of better education and medical services. China’s hukou system was set up in 1958 to control the movement of people between urban and rural areas. Household registration is tied to one’s place of residence and has a bearing on securing access to basic welfare and public services.

Extravagance ban: The winter for high-end liquor producers such as Kweichow Moutai Co. Ltd. (600519.CN) and upmarket catering services providers hasn’t ended. The environment is, in fact, getting tougher for those players. At a Political Bureau meeting presided by Chinese President Xi Jinping, there was a renewed call to fight waste and extravagance among party officials and government departments, and strengthened supervision and harsher punishment for violators. A new regulation is part of the ongoing so-called “mass line” campaign led by Xi that aims to establish his authority within the party and gain more popularity from the public. The regulation offers comprehensive stipulations that cover public fund management, domestic and overseas trips, business receptions, meetings and other official activities, the use of non-private vehicles and offices as well as resource savings.

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