China’s Urbanisation Initiative Calls for Change in “Hukuo” Status

07/01/2014

Dr. Monika Chansoria

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The Chinese leadership’s focus on its “urbanisation” campaign brings to light the government’s push towards fuelling domestic demand and attempting to strike a balance between the urban-rural divide. According to a blue book released recently by the Chinese Academy of Social Sciences (CASS), a premier academic research organisation in the fields of philosophy and social sciences directly under the State Council, China’s current rate of urbanisation is likely to result in 60 percent urbanisation by 2018. At present this figure tops 54 percent with 2013 drawing to a close.

Boosting domestic consumption and creating employment has been a key focus area for the Chinese government with every one percent of growth in gross domestic product creating 1.3 million to 1.7 million jobs specifically in China’s urban areas in 2012. The CASS study announced that a total of 12.66 million jobs have been added since 2012. What comes across as a dichotomy, however, is that while the income generation of China’s rural and urban residents has witnessed an increase from 2010 to 2012, the increasingly large income gap between the two sections has not gone unnoticed and requires immediate attention. In fact, the annual per capita income in the highest income households is nearly 20 times more than that of lower income families.

China’s new approach to urbanisation will go through a litmus test when it has to cater to the 260 million migrant workers who await the benefits stemming from this policy approach. Following decades of urban expansion, the city dwellers make for 52.6 percent of China’s total population. Interestingly, this figure falls to 35.3 percent of the population if calculated on the basis of household registration, known as hukou.

The hukou system in China ties public services such as health care and education to residential status. Those without local hukou are barred from sending children to public schools, coupled with tougher restrictions on housing and car purchases. The gap between public welfare for the locally registered population and for newcomers unable to register—largely migrant workers, is increasingly proving a disconcerting trend for the government.

“China’s urban areas have demanded labour from rural migrants, but offered little in return, including no public welfare, let alone housing”, says Wang Xiaoguang at the Chinese Academy of Governance, terming it as unfair—thus demanding a change in state strategy. Denial to equal access to public welfare unless one changes his/her hukou status, puts a lot of pressure on the government’s urbanisation campaign, which in the last three decades seems to have focussed on the expansion of city areas while ignoring the needs of migrant workers for equal public services.

Based on the above realities and also acknowledging the drawbacks of the existing scheme of things, the 18th National Congress of the Chinese Communist Party (CCP) has advocated for a “new type of urbanisation” in which the people will be accorded first preference. At the third plenum of the CCP’s Central Committee, incorporating human-centered urbanisation into an approved policy termed “core of urbanisation” has been emphasised upon with the primary task of human-centered urbanisation being to help migrants in registering as urban residents. The CCP has set a target of a new hukou status for nearly 100 million migrant workers by the end of 2020. It appears that the foundation of China’s new urbanisation campaign is to grant hukou status to migrants in cities.

In order to bring about a change in the status of migrant workers, the hukou system itself needs to be revamped and it was decided at the third plenum to remove controls over farmers settling in towns and small cities, and relax restrictions on settlement in medium-sized cities. Although the Chinese government has announced to make basic public services in urban areas such as healthcare and education available to all permanent residents and have all rural residents covered by the affordable housing system and social security network, the campaign will prove successful only when there is equal access to public services for both migrant workers and urban residents.

Huang Ming, Vice Public Security Minister advocates that the new hukou system would make stable employment and housing the requirements for urban status by 2020, with the public security ministry, together with another 11 central ministries, drawing up a plan for hukou reforms. The details of this plan remain unknown. What comes out of this debate is that in order for China to develop well-planned and sustainable urban communities, the integration of urban and rural development is an inflexible prerequisite and unless and until there is redressal of the huge imbalance between China’s urban residents and migrant population, the Chinese dream of pushing forth its "humane urbanisation" agenda will not be fully realised.

The author is a Senior Fellow at CLAWS

Views expressed are personal