China: Sweeping Hukou Reforms?

16 Mar, 2013    ·   3845

Namrata Hasija discusses the problems and possibilities of hukou reform in China

Namrata Hasija
Namrata Hasija
Senior Research Officer

The author’s last report (April, 2012) analysed the growing migrant unrest in China. One of the main catalysts in this increasing unrest was the hukou system. The hukou system refers to China’s household registration system, which bifurcates the urban and rural population. This system not only defines the parameters of a citizen’s relationship with the state, but also the benefits one could derive from the state. On March 5, 2013 China opened the first meeting of the 12th National People’s Congress (NPC). One important piece of news from here that has caught everyone’s attention is Premier Wen Jiabao’s speech in the Parliament stating that hukou reforms shall be accelerated to bring in speedy urbanisation and economic development. The questions that arise are what will be the changes in the current system and how will it be implemented across China?

Hukou Reform: Proposed Changes
No official statements have been made by the party leadership on what changes are going to be introduced and how they might be implemented. However, some statements from government officials have indicated two possible types of changes that are being considered by the new leadership. One of these is to replace the current hukou system with a national hukou system i.e. allowing limited mobility to citizens across major cities such as Beijing, Shanghai, Guangzhou and Shenzen. The second is to introduce the metro hukou for the Pearl River Delta which will give full mobility within the delta area i.e. Guangzhou, Shenzen, Dongguan, Foshan, Zhongshan and Zhuhai. The guidelines for the changes would be launched in the first half of 2013 as part of the 10 year urbanisation plan according to Zhang Ping, head of the National Development and Reform Commission.

Hurdles in Reforms: Past and Present
Hukou reforms have been undertaken by many local governments for some time now which have not been successful completely due to the conditions attached to the acquisition of the urban hukou. At some places the migrants were asked to invest in property and only if they invested a certain amount were they granted the urban hukou. Other places had started a point system where points were given on basis of property, education, current assets and so on. Most of the migrants failed to acquire the urban hukou as being poor and uneducated they could not meet the stipulated conditions.

The major problem in implementing these reforms  is the lack of funds, The central government and the local governments need to invest heavily in “urbanizing” migrants, spending an estimated US$ 12,340 for each migrant according to a government think tank (Meyers 2011: 4). The local governments have been avoiding such reforms due to financial burden and the mayors and party secretaries are concerned that if the hukou is freed up they will have to release huge funds to provide services to the migrants. Due to this the national government has not been able to give a green signal to hukou reforms as there is an immense pressure from the local governments to either not to go ahead with the reforms or funds from national government to support the costs of this reform. The costs involved have been the major reason why the local governments keep qualifications that will not be fulfilled by most of the migrants.
The second major problem is that the migrants have to exchange their rural hukou for an urban one by giving up their land in their villages. In many cases migrants have been forced to give up their lands at a low price which leads to a further deterioration in their economic. With no job surety in urban areas the migrants are growing weary of exchanging their lands in the villages in favour of the urban hukou which gives them no economic security.

Hukou Reforms: Possible Solutions?
China’s Party leaders are now considering two options on how to bring about these reforms. According to experts, one solution lies in delinking the hukou from the eligibility criteria for jobs, education and work training. The second option may be to perfect the land management system, which will reduce the unfair requisitions of land in rural areas and give better compensation to migrants in exchange of their farms. Some experts have also mapped out the phases in which this should be carried out for example the reforms should be first carried out in cities with a population of 5-10 million and which are linked to major metropolitans and then gradual progression to cities with lesser population. This would ease the pressure on metros, besides diverting crucial labour to China’s growing cities.

Though the government has not given a clear picture as to what and how these reforms will be introduced, the new leadership has a daunting task in front of them as far hukou reforms are concerned. It has become a necessity for the new leadership to bring in these reforms as it will unlock the funds of 200 million migrants who spend most of their incomes on medical and educational benefits. The money could be diverted to increase domestic demand in the economy, according to Wen Jiabao, which will help China increase its slow growth rate in 2013. The growing migrant unrest in the recent years is also one of the reasons why the new leadership looks serious about the reforms. The future of the reforms however, remains to be seen.