Limited Hukou Reform with distorted measures
The State Council issued a circular on July 30 that focuses on reforming the country's system for household registration, or Hukou. The biggest change of this reform is the different reform measures according to the size of cities.
As noted in this circular, China will promote full liberalization of residency restrictions in small towns and small cities, orderly liberalization of restrictions for those taking residency in mid-sized cities, gradually relaxing residency restrictions in large cities, and establishing reasonable conditions for (permanent) residency in large cities.
The State council has officially issued the Opinions on Further Improvement of the Reform of Household Registration System. Read through the Opinion, we can find that the key word is “order”, which has been mentioned for 9 times in this document. The word “order” involves different aspects of migrant workers into the city, reflecting the government’s extreme attention of the settling of migrant workers.
The reason to emphasize “order” lies in the government’s fear of “disorder”. China’s current urbanization rate is just over 50%, however, if the rate reaches 70% in two years, it will absolutely fear local governments, because the tidal flow of settlers will impose huge pressure on infrastructure and public services. The result might be that the urbanization will not make life better, meanwhile the rural community and agriculture will dwindle due to the decrease of population. If this is the case, it will become a personal and social lose-lose situation: it cannot help improve personal situation, and it will at the same time make social development stagnate.
In fact, since the 1980’s, small city strategy has always been the priority in terms of development. Small cities were preferred because the government believed that small cities can minimize the shock and impact on the whole society brought by the high speed modernization and urbanization and at the same time ensure smooth progress of reform and opening up.
Although small-medium size cities have captured the government’s priority in development, in actual population movement, rural population did not firstly immigrate to small-medium size cities but directly headed to big cities. According to the data recorded in the China Statistical Yearbook, in 1949, there were no cities of which population exceeded 2 million. However, by 2011, the number of such cities has reached 31 with 14 cities whose population has exceed 4 million; on the contrary, the number of small cities with less than 200,000 people dropped from 289 in the 1990 to 4 in the 2011. And, the cities that grew the fastest are those with 500,000 to 1 million people. The number has grown from 28 to 108 between the 20 years from 1990 to 2011.
Why does rural population directly go to the big cities rather than small and medium towns and cities? That is because of the better capacity of the big cities to provide more employment opportunities by virtue of size advantage. As we know, service industries have become the main employers in the modern society. Since the development of service industries should be based on certain scale of population, the population of small or medium size cities is unable to form affective labor division and specialization. In fact, academic studies have found that, compared with small towns, development cost of big cities are even cheaper: the comprehensive development cost of cities over 1 million people is about 1/6 to 1/8 of that of small cities with less than 100,000 people, which means, the money of equal amount for a small city to attract one worker, will attract 6 to 8 persons in a big city of more than 1 million people.
However, according to the Opinion, limits on settlement are only undone in towns and small cities. As for settling in cities of more than 500,000 populations, there are still some limits and requirements as well as at least 3 years’ social security payment records. This means that nearly half of the migrant workers cannot benefit from this reform for now. The findings of the sample investigation of the National Bureau of Statistics shows that the total amount of the migrant workers all over the country was about 26.894 million, of which, the number of migrant workers work out of their hometown is 16.61 million, while the number of workers that work locally is 10.284 million. And half of the workers who went out went to big and medium size cities.
What is more important is that the current household registration reform requires 3 years continuous payment records of social security for migrants who want to settle in medium and big cities rather than towns and small cities. But for most of the migrant workers, the time to choose a city which is fitful for him/her to work will normally beyond 3 years. In other words, a worker may spend 1 year in city A and 2 years in city B and again 2 year in city C. If in this case, by current system, this worker cannot get settled in any of these above cities. Thus, the current reform of household registration system does not solve any problems, but creating more.
We can, of course, understand that the government is worrying about the “disorder” of labor movement, but experience of the past 30 years has proved that the labor movement has always been “orderly” flown to big cities. If the household registration system have had observed deeper into this, various system distortions would be avoided. And the household registration reform in the name of “order”, which emphasizes on the development of small and medium towns and cities, will ultimately result in the mismatch between the policy priority and the actual direction of the labor mobility. Possible result may be that this part of migrant workers cannot get settled in any cities, which might breed greater social problems.
Published on CAIJING.COM.CN| 2014-7-31
