Aug 07, 2013 07:47 PM

Cracking the Hukou Code to Hasten Urbanization

(Beijing) -- Nearly 260 million so-called "migrant workers" in China are anything but migratory. They left hometowns, villages and farms long ago to plant new – now deep – roots in burgeoning cities.

They work in offices and factories, or run their own shops and businesses. They're raising families, buying cars and renting flats.

But they're still, at least in the government's eyes, migrant workers.

Policymakers for years have been scratching their heads over how to manage these de facto permanent residents and other non-native urbanites who hail from distant parts of the country but are classified as "migrants" under the country's "hukou" rules for population control.

It's a clear dilemma: The hukou system renders millions ineligible for key public services in communities where they live, including in many cases education for their children. And even well-rooted workers often are treated no differently than the country's 150 million, on-the-move migrant workers who divide working lives between big cities or manufacturing complexes, and distant places they still call home.

Government officials and academics say the hukou system, which registers each citizen under a single household location, will have to change to meet the urbanization goals set by the recently installed government under Prime Minister Li Keqiang. Adjustments have been underway since 2001, but deep reforms have been repeatedly delayed.

The Li government wants to encourage hundreds of millions of rural folk to move to cities over the next decade. To that end, a proposal for "full liberalization" of the hukou system was recently proposed by the head of government's chief economic planning agency, the National Development and Reform Commission (NDRC).

Questions remain, however, over exactly how central and local governments might apply the general suggestions made in late June by NDRC Director Xu Shaoshi. Government spending, social services and population management issues are at stake. Moreover, a lot of similar suggestions for hukou reform heard in past years have gone nowhere.

There's also a question over how to protect what many say is a basic labor right: A citizen's right to move to and live wherever work can be found without being penalized by the government.

"Freedom of movement should not be a discriminatory policy," said Yuan Chongfa, a researcher at the NDRC's City, Small City and Town Center.

Resistance to Reform

Xu proposed gradually phasing in significant changes to the hukou system, starting with the way small towns handle new arrivals. He called for "full liberalization of residency restrictions in small towns and small cities, orderly liberalization of restrictions for those taking residency in mid-sized cities, gradually relaxing residency restrictions in large cities, and establishing reasonable conditions for (permanent) residency in large cities."

Xu also proposed accelerating what's been a slow effort to close the gaps in social services available for new and old urban residents.

Beijing authorities last waved the liberalization banner in 2011, when the Ministry of Public Security and the State Council's Central Agricultural Industry Office jointly proposed changes to household registration classifications in small cities and counties. Under that plan, permanent residency would have been available to non-natives with stable jobs and homes who paid social security taxes in those communities for a number of years. Local governments could set thresholds according to local conditions.

The 2011 proposals, however, never got past the draft stage.

Around the same time, the NDRC together with 14 commissions and ministries – including the Ministry of Public Security (MSP) and Ministry of Land and Resources (MLR) – rolled out an urbanization development plan that called for overhauling the hukou system by 2020. That plan was shelved as well.

The MSP has not given up. Soon a ministry-drafted hukou management system may be introduced nationwide. A source close to decision-makers said the changes would cover all migrant workers by removing qualification restrictions for obtaining residency permits. And all migrants would have access to education and all basic public services mandated by the central government.

The ministry's plan, coupled with Xu's remarks, underscore efforts to stay on track despite delays for hukou reform.

"Areas that could be liberalized have already been liberalized," the source said. "Those that couldn't be reformed still haven't been reformed."

And a source at the MSP said his agency "intended to roll out residence permit reform nationwide several years ago, but there was a lot of resistance. We were never able to push it forward."

Negligible Impact

Technically, since 2001 small cities and towns have accepted applications for permanent residency status to any newcomer with a stable home and income source. The offer is supposed to include the main breadwinner and his or her close relatives living under the same roof. This open-door policy was supposed to expand to include medium-sized cities in 2008.

Local governments since 2001 have also been encouraged to grant social services to holders of local and non-local hukous alike. Officials say the overall impact of these liberalization steps, however, has been negligible.

The changes have improved conditions somewhat for about 10 million non-natives who resettled in certain small cities and towns, said Li Tie, director and Yuan's boss at the NDRC city center. But for the rest of the nation's migrants "there has been almost no effect," he said.

Yuan noted that targeting small cities for reforms since 2001 has done little to help in many of the major eastern cities, where manufacturing generally relies on migrant labor. Only slight progress has been made toward household registration adjustments in those cities, he said.

The current rules mean that even white-collar but non-native professionals working in Beijing and Shanghai are denied a permanent residency hukou, and thus cannot even buy a home. Permits can be obtained by professionals in special, high-demand fields, but the requirements are high. And it's nearly impossible for an unskilled worker to settle down in the most prosperous cities.

A 2012 NDRC report highlighted the services gap separating natives and non-natives in Guangdong, which has more migrant workers than any other province. Natives can enjoy 17 types of services and benefits in Guangdong, the report said. But 10 types are off-limits to migrants, and the rest can only be "partially enjoyed" or "enjoyed in small amounts," the report said.

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