Non-residents face hard and costly road to get around the hukou barrier

PUBLISHED : Monday, 23 September, 2013, 12:00am
UPDATED : Monday, 23 September, 2013, 4:43am

After working in Beijing for 10 years, Gao Feng, 36, a senior manager at a private technology company, nearly has it all: three flats, two luxury cars, a good job and a happy family. What could be missing? A Beijing hukou.

Hukou refers to permanent residency status, and an urban hukou often affords its bearers a slew of benefits.

For instance, in an effort to control property prices, the Beijing municipal government has set a rule that allows only permanent Beijing residents to buy a second home. To buy a first home, those without a hukou would need to show tax documents going back five years and proof of social security payments.

Similar restrictions apply to many areas, including qualification for low-income housing, buying cars, schooling and pensions. Local media say more than 80 welfare services in Beijing are contingent on permanent residency, with potential benefits worth more than 500,000 yuan (HK$630,000).

"It's still very hard to obtain a Beijing hukou. Although many domestic cities have started reforms in this sector, Beijing is lagging behind, partially due to its capital status and huge population," said Guo Yuhua, a sociology professor at Tsinghua University.

The hukou system was introduced in the 1950s. Before the 1980s, only permanent residents were provided coupons by the city to buy daily necessaries.

As times changed, and almost anything can be bought with enough money, the importance of permanent residency has diminished, at least in small and medium cities. But, for the capital, Beijing, with its 20 million people, hukou still plays a significant role in many people's lives.

Unlike Beijing, most mainland cities, including big metropolises like Shanghai and Guangzhou, have significantly loosened barriers to attain permanent residency. Under a transparent evaluation system, temporary residents can often apply for permanent residency after living in the city for a certain number of years.

"Ten years ago, I thought the hukou system might be gradually phased out as society became more open and diversified. Reality proved me wrong," Gao said.

Over the years, Gao has legally divorced his wife twice to qualify to buy flats. The first time was to allow his wife to buy a home in her name. After that, they remarried and transferred the new flat to his name. By repeating this process, they bought two more flats as investments.

But Gao still faces hurdles when it comes to his six-year-old son's schooling.

"Without a Beijing hukou, my son cannot be enrolled in a good school. A Beijing hukou would permanently solve many education problems for him," Gao said.

To help gain permanent residency, Gao applied for postgraduate studies at a third-tier university - basically, a diploma mill, in the middle of nowhere. The Beijing municipality favours those with postgraduate degrees when allotting permanent residencies, as a way of attracting skilled workers.

Gao then plans to buy a hukou within the yearly quota for permanent residency given to state-owned companies.

These enterprises sometimes have quotas to spare and collude with agents to sell them.

"I need to pay several hundred thousand yuan for a hukou. After that, my son will be able to get his Beijing hukou too. But my wife needs to take a couple of years to apply for hers under the 'family reunion' rules," Gao said.

Gao did not specify the exact amount of the payment. An agent reached by the South China Morning Post said that a quota cost 250,000 yuan this year, but varied from year to year. Some local media even put the cost at 800,000 yuan.

But such illegal trading does carry financial risks.

The Beijing Morning Post has previously reported on a businessman who had failed to obtain permanent residency in Beijing for his son after paying 250,000 yuan and waiting for four years.

A police officer who had promised to help him was caught, but the businessman only recovered 100,000 yuan.