Singapore: Jiangxi went first, then Shandong, then Yichang city in central Hubei. One by one China’s provincial governments are making radical transformations to the lives of residents by abolishing restrictions that made domestic migrants foreigners in their own country.
Under the cover of COVID, one of China’s most restrictive social policies is slowly being unwound. The hukou system of household registration has tied rural workers to their villages and locked in property, schooling and healthcare benefits for urban elites for generations.
Migrant workers at a construction site in Beijing. Credit:Sanghee Liu
Mao Zedong formalised the centuries-old system in 1958, forcing workers to return to their home villages to access benefits. The Chinese Communist Party then used it as a tool to keep farmers farming, monitor residents in their villages and stop cities from being filled with poor migrants as the country rapidly industrialised.
In doing so, it stopped the slums that have characterised many other Asian megacities. But experts say it is now no longer fit for purpose.
The Chinese economy is stagnating and its population ageing, frustrating Xi Jinping’s push for the country to become more self-sufficient through his policy of “internal circulation”. The restrictions meant that migrant workers would stockpile money to take home to their villages rather than spend it in the cities. This also weighed down productivity through unnecessary travel and administrative burdens. Unsure of their futures, migrant workers also tended to save more – further driving down consumption in an already slowing economy.
Since the start of this year, six cities and provinces have abolished or lifted some hukou restrictions that blocked rural Chinese and their children from buying property, attending schools or accessing welfare in urban areas. In February, the island province of Hainan announced it would unify all hukous for urban and rural residents. From June 1, all workers in Dalian – a northern city of six million just below Shanghai and Beijing in the tier system – have had the same rights as those with a hukou. Xiamen, a southern city of five million, is also loosening its restrictions. After years of smaller tier-three and four cities making incremental reforms, China’s metropolises are starting to catch up.
“The benefits of the reform of the household registration system far outweigh the costs,” Zhao Junjie from the China Centre for Urban Development at the Chinese government’s National Development and Reform Commission said last week.
Zhao calculated that if the average of more than 13 million rural people who migrate to cities each year are given hukou rights, consumer demand would grow by more than $35 billion. When applied to the 290 million migrant workers across the country, that figure could rise by 1 trillion yuan, or $220 billion a year. China makes up more than a quarter of the world’s economy and is the world’s largest consumer market, making it the key driver of the post-COVID global economic recovery, particularly among its largest trading partners, such as Australia.
“In many ways, China’s like a big version of the European Union,” says Lauren Johnston, an associate professor at the China Studies Centre at the University of Sydney.
“And Beijing is an administrative centre like Brussels. It has all these different languages, all these different people, all these different provinces. China is trying to move from some version of Europe to some version of the United States, where people can move a bit more freely.”
Cai Fang, a professor at the Chinese Academy of Social Sciences, said the hukou system was impeding the Chinese economy’s ability to bounce back from COVID.
“The economic impact of the COVID-19 pandemic combines aspects of both demand and supply shocks,” he wrote for the East Asia Forum. “So a quick resumption of resident consumption, rather than conventional investment stimulus, is conducive to the recovery of economic growth, and hukou reform has an important role to play.”
Previous attempts at updating the system have been criticised for being incremental and giving local governments too much power to skirt new regulations. These spurts of reform in 2005 and 2014 have largely seen wealthy migrants granted hukous by local governments in some areas, while continuing to block poorer migrants from accessing services.
But COVID-19 has forced a more significant shift online and away from local governments, allowing poorer migrants to access hukou services remotely. At the National People’s Congress in Beijing in March, lawmakers floated a proposal to centrally “digitise residency-related administrative processes”. By April, in the middle of Shanghai’s lockdown, the government announced a nationally integrated “government services platform” had been completed.
That bureaucratic title masks a monumental change driven by China’s cycle of lockdowns. It will allow the 290 million migrants living away from home in China’s major cities to do some of their administrative tasks online without having to return to their villages.
“Imagine if you had to travel to Canberra every time you needed to do your tax or access your pension,” says Johnston. “And then suddenly one day you could do it all online.”
Johnston believes Chinese authorities – long frustrated by inefficiencies but not bold enough to make changes – jumped at the opportunity COVID-19 provided.
“In China, there is an ancient war stratagem for winning that advises to ‘loot from a burning house’. That is, when a country is beset by disease, famine, corruption or crime, it will be poorly equipped to fend off an attack,” says Johnston. “Another says that in the process of carrying out one’s plans, do not miss an opportunity to ‘pilfer a goat’, and then build upon the associated profits.
“Standing between a new elite minority of rent-protecting urbanites and hungry and frustrated masses waiting for their turn to ‘get rich’, it seems China’s leaders may have adopted such tactics during pandemic-related COVID-19 lockdowns.”
The changes are likely to be controversial. Decades of strict hukou regulations have meant that urban, middle-class Chinese have had their pick of the best schools, apartments and facilities in the cities. The same group of millions of middle-class educated workers are also those growing most frustrated at China’s cycle of lockdowns and closed borders. But as Xi pursues a policy of “common prosperity”, the costs may be starting to outweigh the benefits.
A child of a migrant worker studies under candlelight in Beijing. Credit:Sanghee Liu
“The intra-provincial bargain in China appears to risk resembling a let-some-get-rich-first national Ponzi scheme. In other words, the hukou system may even now have transformed from pillar of stability to pillar of instability,” says Johnston.
“Xi is looking at China in [20 years’ time] and thinking ‘what are our barriers?’ … he’s done Xinjiang, Hong Kong and now [hukou] and thinking ‘I’m just gonna stick a big acupuncture needle into that nerve centre’.”
“He appreciates that the promise the party made was to let some people get rich first. So, they have got rich and if they don’t help everyone else to catch up, they are going to have this poor ageing frontier.”
In April, the Beijing Municipal Education Commission announced that it would be “legally guaranteed that children and teenagers who are not registered in this city will be equally accepted”. Local districts followed suit, allowing migrant children into schools in the outer districts such as Mentougou but also into the inner elite districts such as Haidian. Other cities such as Shanghai are also trying to attract top-tier migrants. It announced in December that it would allow graduates of the city’s universities to acquire a coveted Shanghai hukou.
In Beijing, when the school term starts in September, migrant workers’ children are likely to be taking their place alongside the children of hukou residents for the first time.
“My second child was admitted to a primary school in Tongzhou district in Beijing recently,” says Xu Jie, a 41-year-old foreman of an interior decorating firm originally from Bozhou city in east China’s Shandong Province.
“We submitted all application materials via email and allocation of her school was announced online. We didn’t visit any of the government departments at all. It was very convenient.”
Johnston says the full impact of the changes won’t be known until September; in previous years school enrolments have been marked by long queues and haggling with local officials.
“This year there was no visibility of the enrolment process. There was no actual chance to get angry with the local education official or harass whomever – it was just all done online,” says Johnston.
“If the classrooms have many more migrant kids – even just 10 per cent in a good school – that may be a shock to the other kids.”
China’s birth rate has fallen to historic lows. Credit:National Bureau of Statistics, China
China is facing a demographic cliff as it transitions from a developing to a developed economy. Its population is forecast to halve by the end of this century, according to the Shanghai Academy of Social Sciences. Education standards can vary widely across the country with the rural-based children of migrant workers often achieving far lower outcomes.
“There are fewer kids,” says Johnston. “So they need those few kids to be much better educated.”
As the changes are slowly rolled out, resentment among some migrant workers remains. Reduced to second-class citizens for much of their lives, they say the system has unfairly damaged generations of workers for no other reason than the village they were born in.
“Everything depends on one’s capability. If you are as rich as Jack Ma, or have a doctor’s degree, the big cities will welcome you,” says Xu. “But talking about this is meaningless to people in the grassroots like us, we’re like a pebble in the sea that makes a little ripple.”
The restrictions have impacted both manual labourers and white-collar workers. While Xu has been able to enrol his daughter, others have missed out, forcing them to send their kids back to their hometowns to live with ageing grandparents.
A migrant worker abseils down a building in Beijing. Credit:Sanghee Liu
Quan Longzhu, a 45-year-old employee of a foreign investment bank in Beijing, has lived in the capital for all but two of the last 15 years but was told he had missed out on the threshold to qualify for a hukou.
“We paid more taxes in Beijing than many local Beijingers, but the one-size-fits-all policy blocked my daughter from further studying in Beijing,” Quan says.
“I feel very disappointed to see decades of hard and honest work and tax payment in Beijing resulted in this. But it is worse for young people who moved to Beijing later than us. They even have no qualifications to buy a house or a car, not to mention of future high education of their children.”
China’s middle-class rat race has sent the costs of education, housing and consumer goods surging. The one-child policy meant families poured resources into their only child, pumping billions into music lessons, extracurricular activities and tutoring. Xi banned for-profit tutoring last year to stem demand, but the practice continues to flourish on the black market. China’s middle class is increasingly sensitive to change as it grapples with a less certain future.
Delegates applaud as Chinese President Xi Jinping arrives at the National People’s Congress Credit:AP
“They are not going to be happy about these changes,” says Johnston. “Life was competitive enough for them already, as far as they’re concerned. That’s the reason they spend all this extra money on education, which has just been banned. That’s the reason they send their kids to English classes here, violin there – they are ticking every box there is.”
All of which creates a sensitive environment for more radical hukou reform – such as abolishing the system altogether – ahead of the Chinese Communist Party’s National Congress in October or November this year, when Xi is expected to cement a third term in power.
“Assuming Xi Jinping secures a third term later this year, his authority as a precedent-breaking core leader would likely allow him to overcome resistance in local governments that stands in the way of his common prosperity agenda and any hukou reforms it may entail,” the Centre for Strategic and International Studies said in April.
Migrant workers like Xu hope the government can make the changes stick.
“It’s like buying the lottery. You might win one day,” he says. “The metropolis provides such an opportunity. The bigger a city is, the better the chance.”
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