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China reforms restrictive Hukou system

AAP logoAAP 28/07/2016

China is reforming its restrictive Hukou system to encourage migration from rural to urban areas, a key factor in the economic growth of the country in the last three decades.

The "internal passport" system, established in the 1950s by the then nascent Communist government, divides Chinese citizens into urban and rural categories and has led to significant inequalities.

It has been gradually relaxed over the years to address two problems in particular - declining internal migration and the real estate boom that has resulted in many vacant homes.

While hukou does not restrict the movement or employment of migrants, it does prevent them from enjoying the same urban services and rights as the inhabitants of the cities, according to Wang Dong, political adviser at the United Nations Development Program, or UNDP, in China.

The model created historical inequalities between rural and urban areas in China, with the country's coast industrialised and the driving force behind the country's economy, while the rural interior, a source of cheap labor for the cities, stayed poor.

This process, that propelled the economic explosion of the 1980s, has led to the largest migration in history with the movement of over 270 million people, according to the World Bank.

The migrants have been able to earn much higher salaries than they would have been able to earn in the countryside and for several this displacement was synonymous with freedom and opportunities following years of social control during the most oppressive era of the regime.

But the migration has also had negative social impacts as Chinese citizens registered as rural residents enjoy limited rights in cities, which is why many leave behind their children in their native villages leading to a generation of "left-behind children."

However, urbanisation expert Jeremy Wallace, a professor at Cornell University, believe this system prevented big cities in China from becoming enshrouded in shanty towns like in Latin American countries.

However, despite the pros and cons, China is now keen on reforming the current system.

It has made it easier to secure the hukou in small and medium cities to maintain the migratory flow that has powered the Chinese economic model for the last 30 years.

"The entry threshold of urban housing has been lowered and the barrier in the reform system has been eliminated in several small and medium cities, especially in small municipalities," Wang Dong explains.

According to official figures, the growth of migrants in 2015 was 2 per cent, a very low figure as compared to previous years and is not a good news for China, which is looking to transition from cheap manufacturing to services and technology.

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