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UPDATED: August 11, 2014 NO. 33, AUGUST 14, 2014
Changing an Outdated Policy

The Chinese Government has decided to replace the existing household registration—known as hukou—system that separates urban and rural residents with a country-wide registration system, according to a State Council document published on July 30.

The hukou system was established under the planned economy of the 1950s. When the People's Republic of China was founded in 1949, there was no system of household registration. Also, the Constitution adopted during the First Session of the First National People's Congress (NPC) in 1954 stipulated that Chinese citizens would be allowed the freedom to choose where to live and migrate. However, at that time, a large number of farmers swarmed to cities, putting increased pressure on the already high urban unemployment rate. Thus, the Central Government was forced to respond.

In 1958, the Standing Committee of the NPC, China's top legislature, passed the country's Household Registration Regulations, which have now been in place for more than half a century. The restriction of population migration through the hukou system was accorded legal status. Such a system was intended to keep rural and urban workforces at a proper and stable ratio, and prevent a massive influx of rural residents into cities.

However, since the system was put into place, Chinese citizens have been divided into urban and rural groups entitled to vastly different and unequal rights and social welfare benefits. Rural residents were tied to their land, unable to move due to the system. Converting a rural hukou into an urban one has historically been anything but easy.

The reform and opening-up program launched in the late 1970s boosted the country's market economy. As a result, many new jobs were created in cities and severe labor shortages developed. A large number of rural residents poured into cities, becoming the main workforce in places like factories and construction sites. At this time, the planned economy-era hukou system became—and remains—an increasingly large obstacle for free population migration under the market economy.

Thus, reforms are, and have been, in urgent need. Though revisions to the hukou system have been repeatedly proposed and discussed at annual NPC sessions over the past 10 years or so, no substantial progress has been made. Basic political rights, access to employment, education and social welfare are all closely tied to hukou, making immediate reforms nigh impossible.

Recent reforms of the old system should therefore be considered the most ground-breaking initiative to have taken place since the 2006 cancellation of the agricultural tax. The latter helped unify taxation systems between rural and urban areas, reduce burdens on the rural population and enable residents in the countryside to enjoy equal development opportunities. Though it takes time for any reform to have a visible effect, the latest move represents another significant step toward narrowing the rural-urban development gap and reducing the inequalities brought about under the hukou system.

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