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CHINA’S HUKOU SYSTEM

Demystifying Dragon’s Population Registration Mechanism

户口 pronounced hukou literally translates into a registered residence.  China’s Hukou system was introduced as an important tool of the economic and social reforms of the initial years of the communist regime.  It came across as a family registration program that also serves as de-facto domestic passport.  It is meant to regulate the population distribution and rural-to-urban migration.  Household registration record hukou used to be issued per family, and normally annotated the births, deaths, marriages, divorces, and moves, of all members in the family.

Genesis of Hukou

China’s hukou system was introduced as a modern means of population registration.  It was formalized as a permanent program in 1958.  The system was created to confirm social, political, and economic stability.  China’s economy was mostly agricultural throughout the nascent days of the People’s Republic of China.  In order to give impetus to industrialization, the government gave preferential treatment to heavy industry adhering to the tenets of Soviet model. 

To facilitate the finances for this expansion, the state undervalued agricultural products, and overvalued industrial products to create an anomalous exchange between the two sectors.  This amounted to paying farmers less than the market price for their agricultural goods.  In order to sustain this artificial imbalance, the government had to create a system which restricts the free flow of resources, especially labor, between industry and agriculture, and between city and countryside.  

In 1985, the hukou system was substantiated through the provision of personal identity cards.  It is a tool for social and geographic control that unfortunately ends up enforcing an apartheid structure.  The manifestation denies farmers the same rights and benefits granted to urban residents.  

Effect of Hukou

Individuals became categorized by the state as either rural or urban, and they were required to stay and work within their designated geographic areas.  Traveling was permitted under controlled conditions, but residents assigned to a certain area would not be given access to jobs, public services, education, healthcare, and food in another area.   

The repercussions of such an anti-egalitarian approach were felt by a quintessential rural peasant who chose to move to the city without a government-issued Hukou.  He would essentially ironically have the same plight that of an illegal immigrant in the United States.  Obtaining an official rural-to-urban Hukou change is extremely difficult.  The Chinese government has tight quotas on conversions per year.  

Functionality of Hukou

In its current version, the hukou fulfills three main functions:

  • Control of internal migration,
  • Management of social protection
  • Preservation of social stability.

The control of internal migration is the first objective of the system of hukou.  Each citizen must be registered at birth, similar to a census.

What Does a Hukou(Card) Contain?

The register, which is the hukou itself, contains every individual’s fundamental demographic information such as:

  • Status, ie urban or rural
  • Legal address
  • A sector of activity
  • Religion
  • Physical description

Evolution of the Hukou System

After 1958, the rural exodus was punctiliously controlled by authorities. Since the 1980s, however, restrictions on mobility have been largely enforced. Currently, individuals who intend to stay more than three days in a location that is not their residence are compelled to apply for a temporary residence permit.

This rule was enforced as a tool for geographic, economic, political and social control.   It however metamorphosed in an apartheid structure.  The structure which denies farmers the same advantages and rights as those granted to the residents of the urban areas.

Calculus of Agriculture and Industry

Contextually, the People’s Republic of China in its early years was hugely agrarian. To hasten industrialization, the government emulated the model of other countries and prioritized heavy industry. To be able to finance such an expansion, authorities not only encouraged overpricing of industrial goods but also under-priced agricultural ones.

Therefore, the two sectors experienced unequal exchange where peasants’ agricultural products were paid less than their market price.  The Chinese government wanted to sustain such an unjustified imbalance by hook or by crook.  In a desperate attempt to attain its objectives, it put in place a mechanism that imposes impediments in the free flow of relevant resources.  Labor flow between agriculture and industry in the city and the countryside is a case in point.

Urban vs Rural Residents

The mechanism gave rise to a class system,   urban and rural residents. The state wanted these two categories of the population to continue residing and working within their geographical locations.  Although traveling was allowed, it was subjected to government scanner and was allowed only after fulfilling certain conditions.  They were denied access to education, employment, food services, healthcare, and other public services.  It is mandatory to obtain a government-issued rural-to-urban Hukou.

It would not be an exaggeration if the predicament of the rural farmer shifting to a city without the necessary Hukou is compared with an illegal alien in America.  Moreover, owing to the stringent requirements and conditions implemented by the government relating to the issuance of Hukou, acquisition of one is next to impossible.

Adding Insult to Injury

The overall scenario of acquiring a Hulu is further worsened by the strict conversion quotas enforced by the government.  The urban population was the beneficiary of the hukou system throughout the history of early China.

The great famine of China (1959-1961)  was a tragic development, the genesis of which lies in social pressure, economic mismanagement, radical agricultural changes in regulations imposed by the government organs, and of course natural disasters.  In the second half of the 20th century in general and during the Great Famine in particular, those with rural hukous were subjected to collective farming.  

Benefactor was Punished

The agricultural produce of Rural dwellers was collected by the state as tax and given to urban dwellers.  As a result, rural populace underwent massive starvation.  The government was shaken from deep slumber only when there was mayhem in urban areas as well.  While residents of the urban areas benefited from various socio-economic advantages, the marginalization of rural citizens remained even after the Great Famine.

Ironically, even today, Farmers pay taxes three times bigger than urban dwellers but continue to be denied a reasonable standard of life, education, and healthcare, if at all.  China’s hukou system solely served to limit increased mobility, and in the process enabling the emergence of caste system within the society.

Voice of Suppressed

In the 1970s, where there were capitalist reforms, about 260 million rural residents traveled to the cities illegally, with the intention of accessing the development in the economy enjoyed in the urban areas. Many suffered discrimination and even imprisonment.

Increased unemployment and criminality are blamed on them.  Yet, they continued to live in the urban areas, but in street corners, shantytowns and railway stations.

Advantages of  Hukou

Early on, urban hukou made it possible to provide every urban household with access to housing, food, and other necessities based on their rights and finances. Despite a reduction in public subsidies during the economic liberalization in the 1980s, the urban hukou was upheld as a license  for accessing employment, education from the best universities and the purchase of the real estate in the urban areas.

Numerous social security benefits also come with a government-issued hukou including the following:

  • Health insurance 
  • Retirement allowances
  • Unemployment insurance
  • Maternity benefits
  • Work insurance
  • Housing fund as provided by the employer

Drawbacks of Hukou

The benefits constituted the “mandatory benefits” provided to all Chinese workers, subject to exceptions, ie only to those working within their locality where they are registered and not within the place of residence.  However, with the rise of internal migration towards urban centers at the beginning of the economic opening in 1978, the urban hukou has become a bone of contention within Chinese politics.

By the 1990s, these benefits extended even to the relatives of hukou holders by virtue of the reforms implemented during the period.  This included spouses of holders, but only those who are buyers of large real estate assets or those working with special qualifications.  Also at the time, a number of migrant workers were given residence permits, giving entitlement to limited benefits.

By 2001, those residing in small towns and areas, ie outside the built-up areas, can be issued hukou as long as they meet certain criteria, eg income.  Another method for rural residents to acquire hukou is paying a predetermined amount of money.   Those living in larger towns are imposed with stricter criteria in order to limit the soaring costs related to the increased speed of urbanization.

Saving Grace

Currently, the hukou reforms remained decentralized, modest and progressive.  These reforms were prioritized by the State Council of China in 2010 up to 2012.  The objective was to relax criteria for migrants’ access to a second rank hukou while keeping a status quo with regard to prevailing rules within cities.

This reworking was carried out to enable migrants having a fixed address and stable job in a small town to acquire an urban hukou.  The local authorities are empowered to determining the minimum eligibility period of residence.

In medium-sized cities, migrants will be eligible to get an urban hukou if they obtain stable employment for three years and have participated in the social security scheme for a number of years.  These new rules also limit the scope of rural land exchange programs against an urban hukou.

Contentious Issues with the Current Hukou System

The current hukou system continues to impose an economic-political differentiation between holders of an urban hukou and rural hukou.  It is deemed to restrict numerous privileges for migrants, an eg quota of slots in universities, facility access to certain jobs, and unemployment benefits.

No Standardization

This is in the exception of Guangdong, where reforms have been introduced that aim to extend such benefits to migrants, including access to the housing fund, public housing, and higher quality public service.

Elsewhere, it is mandatory to be in possession of an urban hukou to be able to buy city housing. In rural areas, rural citizens have their own advantages, ie right to exploit the agricultural land, allocation of residential land, and flexible application of the Single Child Act for those whose first child is female.

Anomaly in Public Spending

China’s decentralized system has created imbalances in public spending between cities and the countryside.  These disparities resulted in unequal access to goods and services, and variability in the quality.  Therefore, there are inequalities in employment, with the citizens of certain regions being better equipped for the labor market.

This discrimination in favor of urban dwellers has contributed to rising inequalities in China, which have been growing steadily for two decades. However, there is a possibility for this to slow down in the future given the economic growth experienced in central and western China, eg enhanced wages of migrant workers leading to diminished variation in financial gains between migrants and natives in cities. This reversal of the trend would continue to take place depending on the hukou reforms.  The development would enable all citizens to seize existing opportunities with equal ease.

Viewpoint

Since the larger cities have reserved the delivery of new hukou to households with high income or high level of education, there is currently a large group of urban residents being restricted from getting social protection and health insurance.  This translates into only 35% of city dwellers being in possession of urban hukou although more than half of the Chinese populace now lives in cities.   It is tantamount to Majority of inhabitants in the cities being without full social protection in their city of residence.

No doubt, Hukou mechanism is a  powerful deterrent for migrant workers wishing to settle permanently in the city. On the flip side, due to the hukou registration system, at least 250 million migrant workers have no access to social payments, whether for their children’s education or medical assistance.

These urban disparities, coupled with sometimes archaic rural regulations, constitute a particularly important macroeconomic obstacle. It is the goal of the CPEC to rebalance China’s economy in order to increase domestic consumption and reduce inequality.  In the countryside, farmers do not usually own their land, which is lent to them by the authorities for periods of thirty years. In addition, user rights do not seem to be clearly outlined.

Without urban hukou, migrant families, therefore, tend to visit their native rural areas at regular intervals to cultivate their land, to maintain usufruct, and guarantee a minimum level of social protection.  These dynamics is definitely detrimental to agricultural productivity.  The registration system has, therefore, become a major cause of inequality, an obstacle to economic transition and a source of many social problems.

02 Jul 19/Tuesday                                                          Written by Naphisa

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