26 August 2019
China's hukou reform is aimed at giving rural residents equal rights as their urban counterparts, including education opportunities for their children. Photo: AFP
China's hukou reform is aimed at giving rural residents equal rights as their urban counterparts, including education opportunities for their children. Photo: AFP

Same hukou for all? Not so fast

On July 30, China issued guidelines to reform its decades-long household registration system, commonly known as hukou. The move is a step forward in the country’s endeavor to optimize its outdated population management system.

The document is aimed at unifying hukou and social benefits associated with it, but achieving the goal may still be an arduous task, facing massive resistance, possibly from local authorities and China’s own realities.

China has a dual household system that has divided people into urban and agricultural households since 1955. Different hukou holders have different social welfare benefits.

Generally, urban hukou holders enjoy better education, medical care and pension while their rural counterparts are entitled to farmland use rights and are allocated rural land to build houses.

First of all, the hukou reform does not totally remove the distinction between rural and urban residents. It does not remove all the barriers that hinder migration, mostly from rural to urban areas.

In a chapter titled Innovatively Managing The Population, the document says China will set up a unified hukou system by canceling the distinction.

This was interpreted by the media as a means to give rural residents equal rights as urban residents in employment, education, medical care and housing.

This is a misunderstanding. In a paragraph after the clause on the cancellation of hukou distinction, the document says a system of residence permits will be set up to allow qualified migrants to enjoy urban services and social benefits.

Whether a rural emigrant is eligible and to what extent he or she can enjoy these benefits depends on how long they have lived in the city and how many years they have contributed to social insurance programs.

In this sense, the residence permits replaced some functions of hukou in selectively distributing social welfare resources.

Simply put, even rural migrants have the same hukou as their urban counterparts, or they may not be able to enjoy equal urban benefits because of the restrictions based on residence permits.

Entirely rooting out the distinction between rural and urban hukou, and the benefits tied to them, takes longer than many have expected.

So what is the significance of the ongoing hukou reform? The document offers one clue or two. According to the guidelines, China plans to move another 100 million rural residents and migrants to towns and cities by 2020.

Behind the drive is the thinking that urbanization can be a lasting engine for China’s economic growth in the coming decades. Premier Li Keqiang, who has been researching urbanization for years, is clearly a big fan of the idea.

According to official figures, the country’s urbanization rate has exceeded 50 percent but it still lags the western level of more than 70 percent.

During the process, the economy can get a big boost, with opportunities created for sectors such as construction, property, infrastructure and services. This is important for a country that is struggling to find a new economic engine when slower growth is becoming the new normal.

Urbanization is basically about people moving from rural to urban areas but China’s dual hukou system makes rural migrants feel discriminated against and hence hinders the free migration within the country.

That’s why authorities are trying to narrow the difference between the two types of hukou. This difference will first be lifted in towns and small cities, where a resident, who has lived long enough in cities no matter if he or she owns a property, can apply for an urban hukou and enjoy all urban social welfare benefits.

By comparison, larger cities will impose higher threshold for migrants.

No matter how high the thresholds are, one thing is for sure: urbanization will require governments at all levels, especially local administrations, to spend more on social welfare.

But not all local governments are financially strong enough or have the public awareness to undertake such spending. And this is probably also where resistance against hukou reform may come from. Artificially imposed thresholds and delays in policy implementation may be common.

In addition, hukou reform alone cannot succeed. It requires the cooperation of all kinds of other changes.

For example, changes to rural land use are needed so that farmland can be traded more freely and residents, rural or urban, are allowed to acquire farmland on market rules.

Medical care and pension programs must be unified nationwide so people can enjoy equal services no matter where they live.

– Contact us at [email protected]


The writer is an economic commentator. He writes mostly on business issues in Greater China.

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