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Shanghai's Hukou System Reform


    CHINA's financial center Shanghai recently aroused wide attention with its new hukou policy, which allows some non-locals to apply for permanent residency in the city.

    In China, living in Beijing doesn't mean that you are a Beijinger, and it is the same in other cities. Without a local hukou, people can only hold a temporary residency certificate, even if they have lived in the city for years. Locals refer to temporary residence certificate holders as non-locals. As "non-locals" are not entitled to the full spectrum of social rights and welfare benefits, many desperately seek local hukou. Shanghai has a population of 19 million people, of whom six million do not have permanent residency.

     However, those seeking permanent residency in Shanghai under the new regulations have found that the requirements are not easy to meet. To qualify, applicants must have held a temporary Shanghai residency certificate and have been in the city's social insurance program for at least seven years. Applicants must also be taxpayers, have obtained vocational qualifications at intermediate to high levels, and worked in pertinent fields. They must also have clean credit and criminal records.

    According to relevant government departments in Shanghai, there have only been about 3,000 "non-locals" in the city who have met the two "seven years" conditions, and fewer still fulfill all the requirements. But local officials argue that as time goes by, there will be more qualified applicants. The new hukou policy in Shanghai will be administered on a trial basis for three years.

    Since 1958 the Chinese government has maintained a hukou, or household registration, system dividing the population into urban and rural households. With better social security, welfare benefits and public services in the cities, permanent urban residency appeals to many Chinese.

    As social security and welfare are all covered by local finances, only hukou holders can receive local public services, which may vary greatly from region to region, with the best in big cities. Therefore, college graduates might give up a higher-salary job in a small city for the chance of hukou in big cities such as Beijing and Shanghai. And some parents are willing to do everything they can to obtain a hukou in big cities to make it easier for their children to enter prestigious universities.

    Thirty years after reform and opening-up was initiated, the movement of labor in China is reaching its peak. This has seen more and more people work and live away from their hometowns, yet they usually remain tied to their birthplace by their hukou. Migrant laborers without permanent residency in the areas where they work face many inconveniences when it comes to obtaining a passport, applying for permits to visit Hong Kong and Macau, registering marriages, and sending their children to school. They have to go back to their hometowns where their hukou is registered to do all these things, often incurring high costs and wasting a lot of time.

    Calls to abolish the hukou system have never ceased, and there have been slight changes to the system. For a time Beijing and Shanghai implemented a policy granting local hukou to out-of-towners who purchased local apartments. However, the policy was short-lived, and the temporary residence certificate was introduced instead. Policymakers are concerned that the social security system in big cities will be overwhelmed by an immense influx of migrants if the hukou system is scrapped.

    In 2007 the Ministry of Public Security announced that the Chinese government will make great efforts to carry out hukou reform, meaning it will gradually abolish the rural and urban hukou distinction, in a bid to realize an equal social standing for every citizen. Since 2003, 13 provinces and municipalities such as Hebei and Liaoning have launched experimental reforms, in which all local households, rural or urban, hold the same hukou. However, authorities can still tell if a person is from the city or the countryside by examining the residential address on their residency booklet. Furthermore, the social security system built around the original hukou system has seen few changes. Consequently, some analysts say this kind of reform has more symbolic than practical significance.

    In a time of financial crisis in which spurring domestic consumption has become crucial, local governments should contemplate hukou reform from the perspective of upgrading social security. A unified household registration system in China will not be achieved until social security is upgraded all over the nation, freeing average people from worries about the essential services that take up a big chunk of their incomes. This would also allow a big leap in domestic spending.

VOL.59 NO.12 December 2010 Advertise on Site Contact Us