Working and living in Shanghai does not mean you need a residential permit. Shanghai has a population of 20 million people, but 6 million of them are not registered as permanent residents.

Although it's said Shanghai's household registration policy is becoming more relaxed, real changes are yet to come.

Ms. Ren, is a migrant worker, who came to Shanghai with her husband and son 12 years ago. She has been here ever since. She now owns a shoe-repair shop on a street corner in Pudong New Area. With her temporary residential permit and her temporary city residence card, Mrs. Ren says she doesn't feel her life has improved. Now she's worried most about her son's further education in Shanghai.

"My son will graduate from junior high school next year. But as we only have temporary residency status, he will not be allowed to go to senior high school in Shanghai," Ren said. "We will have to leave Shanghai.. I envy those who've got Shanghai hukou, but it is not possible for people like us who are not well-educated to get a Hukou here. But that is why we want to send our children to study here."

Compared to Ren, Xiao Wang, a white collar worker who graduated from a well-known local university, is lucky to have a Shanghai Group hukou from the owner of the company he works at. Now he's bought an apartment in the city and this allows him to become a permanent Shanghai resident. But unlike Ren, he feels hukou is just something that shows where you work and live.

Wang said, "I don't feel I need hukou that much. Lots of my colleagues feel the same way. I think it is more important to find your own identity in the city through your talent and hard work."

Like all other cities, Shanghai doesn't just want people, it wants talent. Experts say the conflict between social equity and the possible burden that might slow down development is the key problem.

Professor Peng Xizhe, director of Institute of Population Reearch, Fudan University, said, "It is very contradictory. In my opinion, the best way is to gradually peel away the benefits attached to Shanghai Hukou, except the basic living allowances. Without the welfare advantage, the hukou problem would be much simpler. However it would be easier for the small- and medium-sized cities to loosen control of the household registration system. In Shanghai, each step should be taken carefully."

It is low-income people like migrant workers who need the hukou the most. They work hard to get a better life in the city, but the hukou stops them benefiting from further education, stable hospital-treatment as well as other welfare services provided by the city they have helped to develop. However, loosening the welfare household system will definitely increase the burden on the city itself. It's a dilemma that is not easy to change.

(CNTV.cn August 17, 2010)