• Tue
  • Dec 23, 2014
  • Updated: 11:27am

China scraps urban-rural distinction in 'hukou' household registration system

Analysts say change to 'hukou' system unlikely to have immediate effect on social benefits

PUBLISHED : Thursday, 31 July, 2014, 4:29am
UPDATED : Thursday, 31 July, 2014, 9:32am

The decades-old distinction between urban and rural dwellers in the mainland's widely hated hukou, or household registration system, is to end, but observers doubt it will bring an immediate narrowing of the gap between city and countryside.

From now on, citizens will be classified simply as "residents" rather than as "agricultural" or "non-agricultural" workers.

But the social entitlements they receive will still be determined by where they are registered, and in rural areas these will remain far lower than in cities for years to come. Since its establishment in the 1950s, the system has kept farmers from enjoying the same social, economic and political rights as urban dwellers.

Around 100 million migrant workers are expected to have their hukou transferred to cities by 2020, according to an estimate by the Ministry of Public Security and National Bureau of Statistics.

However, while rural migrants will be encouraged to settle in smaller towns and cities, the biggest cities, where a local hukou guarantees the best social benefits, will impose more restrictions to curb population growth, a State Council document announcing the change said. Huang Ming, deputy public security minister, told a news conference yesterday: "Megacities like Beijing, Shanghai and Guangzhou have seen the number of migrants grow by 400,000 to 500,000 a year in the past decade. The pressure is too high."

Xu Xiaoqing, director of the rural economy research department at the State Council's Development Research Centre, said the move was just a start.

"The removal of the distinction in the hukou only makes a difference on paper. The real difference will be made when the gap in terms of social benefits is filled," he said. "There's still a long way to go before there is an equalised social security net among different regions. The fundamental solution is to unify social security [nationwide]."

For example, in Zhejiang , one of the areas where the rural-urban gap is considered the smallest, a retired government employee in a city can have a state pension of over 5,000 yuan (HK$6,300) a month, but a farmer often has less than 1,000 yuan.

Professor Kam Wing Chan of the University of Washington said the wide variations in the quality of locally administered social welfare and social services had made "the elimination of the rural and urban hukou classifications insignificant".

The Beijing News noted that President Xi Jinping , while governor of Fujian province 13 years ago, had urged the scrapping of the hukou system in his doctoral thesis.

Additional reporting by Kathy Gao


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wow. That means that soon the shenzhen border will be filled with hong kong gold diggers.
It's natural for the Chinese authority (and some scholars) to think that the farmer workers should migrate to the country's small and middle cities, big and super-big cities , in that order, in an orderly way, in the coming decades.
Disorder is the last thing they want.
But very often, what's intuitively correct or egalitarian to the government officials is sometimes (or usually) economically wrong or inefficient.
The fact is that the Chinese farmer workers have been flowing mainly to the big and super-big cities, not the small and middle cities, over the years, in an orderly manner.
In particular, the service industry is able to attract and absorb lots of workers.
But the healthy development of a service industry has to rely on a high population density, which can only be achieved in the big and super-big cities.
In the small or even middle cities, there are usually not enough scope for effective division of labour or specialization --- a prerequisite for voluntary exchanges.
Any reform made by the government, if it is to be successful, should facilitate or follow the present trend, not against it, because that's what the people really want.
It's much easier to row a boat along a river downstream, rather than upstream.
(Chinese readers: ****comments.caijing.com.cn/20140731/3638414.shtml)
What about the problems of traffic congestion and air pollution resulting from having 'too many people' in a big city ?
Well, these problems are not unique to China's big and super-big cities.
To solve the problems, they could always learn from the other big cities in the world.
Better urban planning (more and better roads, bridges, tunnels, or underground rail systems, appropriate land plot ratios, private car restrictions, electronic road pricing, etc.) is definitely needed to solve the problem of traffic congestion.
Less use of coal, more use of clean energy, less imports of low-quality oil from abroad by the 'two-barrels-of-oil', refined and sold at high prices to make their fortunes, relocating the polluting factories to other places, and so on, can help solve the problem of air pollution.
Where there's a will, there's a way.
The present natural direction of flow of China’s farmer workers seems to be at odds with that proposed by the Chinese authority in the recent hukou reform:
the country’s inter-provincial migrant farmer workers concentrate mainly in the big and super-big cities.
According to the statistical data, one-half of the country’s farmer workers works in the country’s first ten big cities, with a quarter of them concentrating in the first 4 super-big cities (Beijing, Shanghai, Guangzhou, Shenzhen).
The present hukou reform mainly encourages the farmer workers and their family members to settle in the country’s small and middle cities.
(Chinese readers: ****finance.takungpao.com.hk/hgjj/q/2014/0731/2641669.html)
It may be a better idea to develop a number of super-cities in the country, where the benefits of economies of scale can be fully realized.
With a much higher population density, more and better infrastructure projects can be provided by the local governments to raise the overall living standard of their citizens.
Those projects can be expected to be mostly self-liquidating, thanks to lower average cost of production (and hence lower price charged to the users) resulting from economies of large-scale production.
If so, together with more tax and other revenues, those local governments' debt/GDP ratio can be expected to drop gradually over time.
But the smaller and middle cities may not be able to get these kinds of benefits, resulting in more debts over time.
The central government can no longer shirk the responsibility of spending more in the coming years, mainly in the form of fiscal transfer payments to the local governments, to help the latter effectively absorb those farmers coming into their cities.
It's even better to enact the hukou and rural-land reforms at the same time.
This way, most of the farmers can enter the cities as relatively wealthy citizens, so that they can rely less on the public services that have to be expensively supplied and financed both by the local and central governments.
Classic "bait 'n switch" ploy. Well done, comrades.


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