Reform of hukou system

A sweeping reform being planned for China's decades-long hukou, or household registration, system, if forcibly pushed through in the years ahead, may remove the entrenched barrier that has stopped many rural people settling in cities and lubricate the country's efforts to accelerate urbanization.

Huang Ming, vice-minister of public security, said at the ongoing session of the Chinese People's Political Consultative Conference National Committee, China's top advisory body, that a unified national residence permit system is due to be set up to replace the controversial hukou system. He said on Wednesday it will allow migrant workers who have worked in cities and joined their social insurance networks for a certain period of time to enjoy the same welfare guarantees and services as registered local residents do. According to him, different standards will be adopted for large, medium and small cities.

This will be a significant reform that will help boost China's urbanization campaign and facilitate its efforts to shift to consumption-driven growth of the national economy.

Dating back to the 1950s, the hukou system, which has subjected migrant workers to a discriminatory "secondary citizen" status in the cities where they have long worked, lived and paid tax, has been increasingly under fire for causing institutional inequality and being unsuitable now that the country's highly liberalized economic activities make demographic movement common.

China's urbanization rate is 52.57 percent, according to the National Bureau of Statistics, but experts estimate the real urbanization rate is much lower if people who live and work in cities but are denied a local hukou are deducted.

In his Government Work Report, delivered to the ongoing session of the National People's Congress, the country's top legislature, on Tuesday, Premier Wen Jiabao said that hukou reforms should be accelerated to drive China's urbanization efforts and underpin its economic development.

Urbanization will offer a new driving force for China's sustainable economic growth in the future, but at the same time, as the Party's new leadership has stressed, higher quality urbanization, aimed at improving people's quality of life, should be pursued.

Without fundamental changes to its current biased hukou system, China's renewed urbanization drive will not eradicate the obsession with infrastructure construction and the expansion of cities and will not boost domestic demand.