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Hukou - Obstacle to Market Economy
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When Du Yumeng was born in December 2005, she was probably not aware that she had been classified into a different category from other babies -- a category which includes people toting wheelbarrows of fresh fruit, selling steamed buns from a corner booth or peddling phone cards.

They all share one thing in common -- a rural 'hukou', or household registration.

Set up in 1958 in order to control mass urbanization, China's hukou system effectively divides the population in two -- 'the haves' (urban households) and 'the have not's' (rural households).

Under the system, rural citizens have little access to social welfare in cities and are restricted from receiving public services such as education, medical care, housing and employment, regardless of how long they may have lived or worked in the city.

Even though Yumeng's parents had been working in Beijing for 10 years, she had to be born back in her father's hometown of Shuangfeng Village, Anhui Province. This was primarily due to her parents' lack of access to services in Beijing and the need for a birth permit from Shuangfeng, where the hukou is registered.

Aged 31, Yumeng's father, Du Shujian, receives a monthly income of 2,000 yuan (US$250 dollars) as an interior construction worker. He has been deprived of urban medical and social welfare ever since he arrived in Beijing 10 years ago.

What's more, because of the restrictions of the hukou system, Du is prohibited from buying an affordable house in Beijing -- you need a Beijing hukou for that.

"I have decorated so many apartments for Beijing citizens, but I don't know when I can have my own," Du said.

"And my daughter -- I feel sorry for her as she had no choice but to have the same rural hukou as me, though she is too young now to know what it means for her."

The evidence of China's economic success is clear for anybody to see, with a forest of construction cranes permeating almost every major city. This however, has only exacerbated the problem of urbanization, by drawing more and more rural dwellers off their farms and into the city in search of a better life.

The subsequent expansion of the service industry in the cities, in line with the expanding middle class, has created a vacuum in the secondary sectors that rural laborers hope to fill.

Government figures estimate that there are about 120 million migrant workers who have moved to cities in search of work, though the real figure could be much higher.

Beijing has borne the brunt of this mass urbanization as the city spawns building after building in preparation for the 2008 Olympics. A growing number of migrants like Du who relocate to find better jobs here tend to stay longer or even resettle with their entire families.

A study by the Renmin University of China revealed that this 'floating population' in Beijing, currently stands at over 3.5 million, with most staying an average of five years in the city.

Ruminating reform

As China is struggling with the social effects of a widening rural-urban divide, there have been growing calls to reform the hukou system, owing to the fact that millions of farmers have illegally started moving to towns and cities in order to find work. 

In a week-long poll conducted in March by website Sina.com and the China Youth Daily social survey center, 92 percent of the 11,168 respondents said that the system was in need of reform.

More than 53 percent said restrictive policies attached to the system, such as limits on access to education, healthcare, employment and social insurance should be eliminated. More than 38 percent called for the system to be scrapped entirely.

"Hukou has played an important role as a basic data provider and for identification registration in certain historical periods, but it has become neither scientific nor rational given the irresistible trend of migration," Professor Duan Chengrong, director of the Research Center for Population and Development at the Renmin University of China, said.

At a national public security conference on March 29, officials from the Ministry of Public Security proposed a way to deal with the inequalities across Chinese society and bridge the divide.

The conference suggested eliminating the two-tiered household registration system and to allow freer migration between the cities and the countryside.

Equal rights required

However, simply allowing freer migration does not address the many problems that migrant workers face when they finally get to the city.

According to Zhang Chewei, deputy director of the Research Institute of Population Science at the Chinese Academy of Social Sciences in Beijing, the system denies migrant workers their fundamental right as a Chinese citizen to be treated equally.

He cited that a Beijing citizen earning less than 2,500 yuan ($313) a year could receive monthly subsidies as well as medical insurance, a pension and even low-cost housing. That was in contrast to the few benefits given to farmers living on the same income.

Education for migrant children is an equally controversial topic, with migrant families often charged discriminatory tuition fees at urban schools -- a practice that is officially prohibited.

Each migrant worker for example, must shell out between 20,000 to 30,000 yuan (US$2,500 to $3,750) for a child to enrol in a local primary or middle school.

Zhang remarked that, "As migrant laborers have made their contribution to urban development, they should also be given fair treatment when it comes to social benefits and justice."

Besides the unfair treatment, Professor Duan believes that the hukou system is also "an obstacle to the market economy". "The trend is towards eliminating it," he added.

Professor Duan went on to say that while the hukou system has failed to stop the influx of rural dwellers into the cities, it has impeded their integration into those areas and their access to the most prized jobs.

"Hukou reforms therefore, could allow China to channel labor to where it is most needed, rather than to areas most popular among the labor pool," Duan said.

However, the lack of control over the surplus migrant labor force, not to mention their families, continues to weigh heavy in the decision-making process. The inadequate infrastructure of many Chinese cities also affects the process.

"If the new hukou system is not matched by the introduction of social programs, the only kind of freedom that official red seal will provide for is the freedom to create urban slums," said Duan.

"More equality in the availability of urban education and healthcare should be granted for all workers and their families, while more rural townships need to provide useful public services so that there would not be so many people yearning to move to the cities."

The International Organization for Migration, which opened a new liaison office in Beijing last month, is set to launch a US$3 million project in a bid to help Chinese government agencies and social organizations improve their mechanisms and services to protect the rights of migrant workers.

Twelve provincial areas, including Hebei, Liaoning, Shandong, Guangxi and Chongqing, have launched trial reforms to help bring an end to the differentiation between rural and urban residents.

Beijing, Shanghai and some cities in Guangdong Province have loosened some of the restrictions that previously hindered people from changing their hukou. Northeast China's Heilongjiang Province is also initiating trial reforms in its household registration system, and aims to have them fully implemented across the province by the end of the year.

When being told that he may one day be able to change his rural hukou for a Beijing city hukou, Du Shujian could not hide his excitement, and asked: "Do you know when exactly?"

"It is not for me, you know," he remarked.

"I have been in Beijing for 10 years and I survived, but it will mean a lot for my daughter -- I want her to attend a decent kindergarten and elementary school, just like other Beijing kids."

(China Daily May 21, 2007)

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