Written by Monika Chansoria.

The rising urban-rural divide has become a serious socio-political challenge for the Chinese government. In an attempt to confront this mounting problem, the Chinese leadership has focused on an “urbanisation campaign” to boosting domestic demand whilst also creating jobs. With the challenge of having to cater for nearly 260 million migrant workers who await equal benefits in education, health care, social security, housing and pensions, the urbanisation campaign can be interpreted as the cumulative effect of three decades of urban expansion. Notably, people living in cities make up 52.6% of China’s total population – but just 35.3% if calculated strictly on the basis of household registration status, locally known as the hukou. The hukou system divides residents into urban and rural categories with unequal benefits in education and other services.  

Migrants working in big cities without a permanent urban hukou have no or restricted access to the social services provided by the cities. With public welfare services such as health care and education being connected to residential status, those without a local hukou cannot send their children to public schools. This is coupled with tougher restrictions on housing and other purchases. According to Wang Xiaoguang at the Chinese Academy of Governance, “China’s urban areas have demanded labour from rural migrants, but offered little in return, including no public welfare, let alone housing”. The Chinese Communist Party (CCP) has set a target for providing new hukou status to nearly 100 million migrant workers by 2020. For this, a revamped hukou system will have to be introduced which gives equal access to public services for both rural migrant workers and urban residents.

As Chinese investments continue being directed towards major cities, migrant workers are attracted to the cities in search of jobs and a better future. With the local government revenue system dominated by land sale revenues, local governments in smaller cities do not have the means for development, primarily because the land in these regions cannot be sold at a good price. For hukou reforms to be effective, they also need to be implemented in bigger cities, including Beijing, Shanghai, Shenzhen and Tianjin, and not be restricted to medium and smaller cities and towns only. When Zhan Anxiang bought an apartment in in Zhuliang Township in east China, he became entitled to what is known as a “non-agricultural hukou.” However, he shows no interest in changing the status of his hukou and argues, “If my hukou status changes, what would I do with my land?” Farmers like him have witnessed many rich villagers buying homes in Zhuliang.  However, very few express a wish to change their hukou status. This emphasises the point that changing an individual’s hukou status to a smaller town does not offer much benefit. The rural hukou brings in greater benefits, including a courtyard house, farming subsidies and rents from farmland. Some farmers near city suburbs are given compensation after land seizures.

It has often been argued that China needs to address the policy that regulates farmers’ plots, which remain collectively owned since the Mao era. Land in China is divided broadly into two categories, urban and agricultural. No matter how valuable a farmer’s plot might become, the right to sell it remains with the collective. Moreover, while collectives cannot develop land, they can sell it – and the local government can then reclassify it as urban.

The belief within China is that urbanisation is the key to resolve the urban-rural dual structure and achieve integrated development. That said, there are substantial bottlenecks in China’s urbanisation drive given the huge imbalance between China’s urban residents and rural migrant population. Although the government intends to remove hukou restrictions in towns and smaller cities, it is the bigger centres of population that hold the key. Opening the urban hukou to migrants would be difficult to accomplish, given that almost a third of 700 million Chinese urban dwellers constitute the migrant or “floating population.” With 230 million people expected to migrate to urban cities from rural areas of China by 2030, the floating population is set to rise from 254 million to 310 million, according to China’s family planning authority. A blueprint for urbanisation announced by the Chinese State Council plans for 60 percent of the population to be urban by 2020, meaning another 100 million Chinese will move to the cities.

Cities with a population of over 5 million can now use a ‘points system’ to decide who is to be accorded residence. Chongqing, one of the five national central cities in southwest China, is pushing for a point system that will allow migrants to claim permanent resident permits. In an apparent bid to implement these hukou reforms, Chongqing has ushered in a new residential permit system under which, “all residents will be registered under the same residential permit and covered by the same basic benefits… and by 2020, the urbanization rate of Chongqing will reach 65 percent…” according to Zhang Zhikui, spokesperson from the Chongqing municipal government. In terms of numbers, nearly 10 million rural residents are expected to become city dwellers in Chongqing by 2020 – this is one of the largest hukou reforms to be put into practice in China to date. After acquiring a certain number of points, migrants can change their household registrations to local residency.

At the Third Plenum of the 18th CCP Central Committee, it was decided that the government would ease controls over farmers settling in towns and small cities, and relax restrictions on settlement in medium-sized cities. Although urbanisation has increased China’s productive capacity, without increasing the consumption levels of the rural migrant workers or the income of the Chinese urban and rural hukou population, urbanisation may very well lead to a decline in the consumption/GDP ratio. For China, which is trumpeting the “60-point blueprint for economic, social and legal reforms” – adopted at the Third Plenum – perhaps the most significant subject would be addressing the land ownership issue.

The way in which the Xi Jinping administration manages the mounting challenge posed by urbanisation will provide greater insight into China’s capacity to handle governance and social stability issues. More specifically, it will also impact upon relations between governments at different levels, in what has already become a polarized urban society. Until the the growing imbalance between urban residents and rural migrants is addressed, the dream of the “great rejuvenation of the Chinese nation” will remain unfulfilled. The massive influx of people into bigger cities has triggered a population explosion and this concentration of an “unsatisfied lot” could well prove an overwhelming for challenge for political and social cohesion.

Dr. Monika Chansoria is a Senior Fellow at the Centre for Land Warfare Studies in New Delhi, where she heads the China-study programme. She is also a columnist with The Sunday Guardian newspaper. Follow her on Twitter at @MonikaChansoria  Image Credit: CC by Micah Sittig/Flickr.