China is to relax its rules on internal migration, making it easier for people to settle in small cities in an attempt to boost its ailing economy and spur growth, the government has announced.
The ministry of public security (MPS) announced plans to lower the bar for obtaining an urban hukou, or household registration. Beijing wants local governments to cancel hukou restrictions in cities with fewer than 3 million people, and relax the restrictions for cities with 3-5 million people, the MPS said.
Larger cities with populations of more than 5 million will also be encouraged to relax their hukou quotas, allowing more people to obtain the highly prized urban registration documents.
The plans were first announced by China’s national development and reform commission, which oversees economic and social policy, in 2019. But it is not clear how many cities have complied with the rules so far.
The measures are an attempt to encourage rural migrants to settle permanently in the cities and contribute more to the urban economy. About 292 million people – one-third of the total working population – are rural migrants working in China’s expanding cities. But without access to public education, healthcare or other social benefits, many leave their families behind and end up returning to villages themselves. Without urban hukou, rural migrants have to pay more for social services and are often barred from buying property in the city.
As well as creating a two-tier system of citizenship, the hukou system deters migrants from spending and settling in cities, which economists say has sandbagged China’s growth.
He Wenlin, a deputy director at the MPS, said the government planned to implement the new measures by the end of the month. But since the 1990s, hukou policies have been decentralised, with local governments allowed to set their own rules about registering new citizens. Chengdu, for example, allows graduates to apply for a hukou while they are looking for a job, as a means of attracting young talent.
Last year, Shanghai relaxed its rules so that any graduates from the world’s top 50 universities could apply for a Shanghai hukou, without having to make any social security contributions in advance.
Thursday’s announcement underlines Beijing’s concern about the need to boost China’s flagging economy. Chinese academics and policymakers have long talked about the need to overhaul the system to help address inequality and labour shortages.
But George Magnus, a research associate at the University of Oxford’s China Centre and the author of Red Flags: Why Xi’s China is in Jeopardy, said China’s slow economic growth was caused more by its ageing population and weak fertility rate. He said: “To the extent that there is a spare capacity of workers in the rural areas to draw upon and go and work in the urban areas, easing the registration requirements may help at the margins … but I don’t think it’s really going to alleviate labour supply problems”.
China’s economy grew by 6.3% in the second quarter of 2023 compared with 2022 – below expectations – and marking only a 0.8% increase on the first three months of the year. Part of the problem is the rapidly shrinking workforce: the number of people aged 16 to 59 declined by more than 40 million between 2019 and 2022.
Thursday’s announcement included other measures aimed at encouraging international businesspeople to return to China. The MPS said it would introduce visas on arrival for business travellers and allow expats to keep their passports while applying for residence permits.
