Starting with the urban-rural divide

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A construction worker atop a 26-story building in Lin'an, Zhejiang province. Hu Huan / For China Daily

Policy | He Wei

Experts, officials urge changes to the household registration system

While urbanization has been one of the key batons conducting the new leadership orchestra, there are divided views on the measurements of its scale and effect.

The United Nations has defined urbanization as the physical growth of urban areas, as a result of rural migration and even suburban concentration into cities.

But according to analysts, at least three sets of gauges are applied in China: spatial expansion, the hukou (household registration) system and rural migration.

By Dec 31, 2012, China's nominal urbanization rate had risen to 52 percent, meaning that more than half of the country's 1.3 billion population had been moved out of the countryside.

But Huang Yasheng, a professor in international management at the MIT Sloan School of Management, said the figure is based on the calculation of massive land acquisitions, or spatial expansion, rather than the free flow of personnel, as well as a relaxation of hukou controls.

In background research for the Organization for Economic Cooperation and Development, Huang referred to rural residents who have migrated to cities to work, but who don't have an urban hukou, as "rural migrant workers".

China's urbanization process is a composite process of two opposing forces.

One is relatively market-based and is driven by cumulative decisions made by hundreds of millions of individuals to move from rural to urban areas.

The other is less market-based and is more political and has to do with the spatial expansion of the urban boundaries.

But even though China's expansion of urban boundaries that encroached upon previously rural areas is intriguing, the urban population rate remained just 35 percent in 2011, according to the National Bureau of Statistics - lower than the world average of 52 percent.

Today's "urban" dweller is generally ruled by residence. That is to say, an individual is considered an urban resident should he or she reside in an urban area for more than six months.

However, many urban residents in China suffer long periods of separation from family members, still left in the country, said Jia Kang, director-general of Institute of Fiscal Science under the auspices of the Ministry of Finance.

"About 70 percent of migrant rural workers in China are married, but just one-fifth of them manage to live with their spouse, with less than 10 percent of those bringing their children with them.

"These are serious issues causing social upheaval over the long term," Jia said.

What's worse, the surging urbanization rate has failed to translate into any significant rise in livelihood or bring social benefits to those migrants moving into the cities, believed to be around 160 million people "on the move".

In contrast to international norms, Huang figures that China's urbanization process has yet to satisfy the financial, particularly on savings, aspirations of rural migrant workers and has delivered few positive effects on rural household income growth.

The official urbanization rationale is premised on the idea that cities offer significant advantages in terms of social services that are particularly valuable to the poor.

"Because the population density of cities is high, it is cheaper - on a per capita basis - for the government to provide unemployment benefits, healthcare and education," Huang said.

Yet the current hukou system, which dates back to the 1950s, has effectively denied migrant rural workers equal access to social benefits such as medicine, education and accommodation, thereby forcing many to save as much as they can to cover those extra costs of living in a city.

The government has acknowledged the urgency to revamp the system.

Huang Ming, the vice-minister of public security, said in March that a unified national residence permit system is due to be set up to replace the controversial hukou system.

Many experts said they believe that abolishing the hukou system is essential for true urbanization to happen in China.

Chi Fulin, president of the China Institute for Reform and Development, said it is essential to unlink social benefits from the household registration system.

Chi said the economic benefits of genuinely converting rural migrants into city residents could be worth hundreds of trillions of yuan by 2020.

"If they come to cities just for work, their average expenditure rose by 171 percent. But if they become permanent residents, they will spend 214 percent more than before, " Chi said.

He predicted that at least 5 trillion yuan ($814 billion) worth of consumption would be created, provided that 130 million to 150 million rural residents become real citizens by 2020.

Chi's plan suggests that in one to two years, household registration should be waived among middle cities and small towns.

But Tang Jun, secretary-general of the social policy research center at the Chinese Academy of Social Sciences, said Chi's plan would be complicated.

"There are far fewer job opportunities in middle and small cities than first-tier piers.

"So even if we abolish the hukou in smaller cities, people would still flock to bigger cities looking for jobs, which would trigger a population explosion that would be overwhelming," he said.

Starting this month, authorities in Guangzhou have taken the lead in Guangdong province by scrapping the household registration system, enabling farmers to enjoy the same training, education and pensions benefits as urban residents.

Zheng Zizhen, a researcher and former dean of the Sociology and Population Institute at the Guangdong Academy of Social Sciences, said that reforming the hukou system should be accompanied by social welfare improvements, rather than the mere change in the details of a residence booklet.

He urged government departments to offer farmers the same levels of social welfare as urban citizens.

Lei Xiaokang, deputy dean of the School of Public Administration at Northwest University, said a gradual approach is needed.

But he added pilot trials to waive the hukou system in Zhengzhou, capital of Henan province, illustrated just how difficult the process could be - the program had to be stalled quickly, as fiscal budgets became overstretched due to the sudden influx of people.