China’s hukou system puts migrant workers at severe economic disadvantage

Editor’s Note: This story is part of a series on China’s development, China Past Due.

After school in her scruffy Shanghai migrant neighborhood, Yang Liping strolls over to a community center for migrant kids, sits down with an ancient Chinese stringed instrument, and loses herself in the music.

“I started playing the guzheng here, three years ago,” said Yang, an affable 16-year-old in a ponytail and a navy and white tracksuit.

She moved to Shanghai from Sichuan in 2008, just after the earthquake, to join her migrant worker parents. And she’s impressed with Shanghai.

“There’s a lot more going on here than in my hometown — a lot more ways I can improve myself,” she said.

Yang would like to stay in Shanghai for senior high school, so she’ll be likely to do better on the all-important college entrance exam. Not only are Shanghai schools better-funded, with better facilities and teachers, but the better universities in Shanghai also require higher scores from those outside Shanghai than from those who go through the school system here.

But staying in the city through senior high school and into college is not an option for Yang, or for millions of other migrant school children like her. That’s thanks to the household registration — or hukou — system, which requires students to take the college entrance exam in the place where their parents are registered. And very few migrant workers can move their hukous to the cities where they work. So some 260 million Chinese migrants — about 20 percent of China’s total population — live as second-class citizens in their adopted cities. In them, but not of them.

China has had a hukou system for at least a couple thousand years, mostly, to keep track of who was in what family. But it was only under Communist Party rule, starting in the late 1950s, that the hukou system started to be used to restrict movement and enforce a kind of economic apartheid.

The change came because the Party wanted to speed the process of industrializing and modernizing China. The idea was that if farmers could be kept on the farms, producing food for factory workers in cities, the urban workers could be paid little, but compensated with an ‘iron rice bowl’ of benefits — free education, health care, subsidized food and pensions.

But that all changed, as China’s era of economic reform demanded cheap migrant labor in factories, on construction sites, doing odd jobs to serve and build booming cities.

“Over the past 20 years, the hukou system has become more and more flexible,” says Wu Jiang, Shanghai’s former deputy director of city planning. “Twenty years ago, farmers still had a hard time moving to cities. Even 10 years ago, local governments might still be thinking, ‘how do we move these people out?’ Now, anyone can live here in Shanghai, as long as they can find a job. So now, the problem is, how can you let this population share the public services as much as the local people?”

It’s a question much on the minds of China’s new leaders. They’ve signaled that a major change is coming to the hukou system, to be announced later this year. Indications are that there’ll be a gradual move to an integrated national system, in which everyone gets basically the same social services, and can move from city to city without losing access to those services.

There’s ample evidence that such a change is past due.

In China’s biggest cities, some 40 percent of the population is “unofficial” — lacking the city’s hukou. Shanghai, for instance, has an officially registered population of about 13 million, plus 10 or 11 million migrant workers, who can’t access the same social services.

Many such cities resist giving hukous, and the accompanying access to medical care, education and pensions, to all these people. They say they simply can’t afford it.

The rejoinder from China’s new leaders is that, in the long run, China can’t afford not to encourage a continued migration to the cities.

“We need to work constantly to improve people’s lives, raise incomes, improve the social safety net, and work hard to gradually strengthen the weak links in our country’s development, including making major medical insurance available for the poor,” Premier Li Keqiang said at a news conference at the end of the National People’s Congress legislative session in March.

Premier Li is an enthusiastic supporter of China becoming ever more urbanized. The goal is for China to go from being about 52 percent urbanized now, to 66 percent by 2020.

“Urbanization will unleash enormous consumption and investment, and provide new opportunities for rural people,” he said at the same news conference.

He talked of wanting to see a new kind of urbanization, that lets rural people truly integrate instead of living in shantytowns, on the fringes of urban life.

If this is in part a humanitarian impulse, that’s not all it is. As China’s economic growth slows and its population ages, China’s leaders are looking for a new engine of sustainable growth. Unlocking domestic consumer demand could go a long way. But farmers and migrants are unlikely to be scooping up iPads and designer handbags, when they have no medical insurance.

Take, for instance, farmer Dong Helong. He and his wife Chen Ying sift through piles of debris from a clothing factory and separate out materials for recycling — cardboard here, plastic there, cloth in another pile. They make about $400 a month doing this, a whole lot more than they made on their soybean and potato farm in Anhui. But they’re under no illusion that they’re living the Shanghai dream.

“I want to have a Shanghai hukou, so we can be treated the same as the Shanghainese,” he said. “If we had to go back to our hometown, we wouldn’t be able to fit in there, because we’ve been in Shanghai for 15 years. We kind of fit into this city already.”

Well — sort of.

The couple’s 6-year-old daughter goes to a nearby private school for migrant kids though, Dong says, the teachers there aren’t as good as in regular Shanghai schools. Their two older kids had to go back to their village in Anhui to finish high school.

“They didn’t want to leave us,” he said. “My son cried for a long time. But we had no other choice.” The couple hope the hukou system changes by the time their youngest is in high school, so she can stay here.

Former city planner Wu Jiang says if China really wants to encourage more people to move to the cities, and spend more money there — it’s high time to rethink the hukou system, and starting making migrants feel like actual urban citizens. Better yet, he says, just get rid of the hukou system.

“I hope it disappears,” he said. “I don’t like the system.”

Wu is now vice-president of Shanghai’s Tongji University, which used to have quotas loading almost half the student body with Shanghai residents. Now, he says, 80 percent of Tongji’s students come from outside Shanghai, bringing in better students, more competition, and a swirl of fresh ideas:

“That gives us a lot of the cultural diversity,” Wu said. “So, the students here, as well as the faculty, are much more active and innovative, I think, than at local universities (that still have higher quotas set aside for Shanghainese students).”

Realistically speaking, Wu says he doesn’t actually expect the hukou system to disappear until it’s become superfluous — that is, until there is an integrated national social safety net, so hukous no longer tie individuals to one place or restrict them from another. Stilll, he hopes the system soon relaxes, so migrant kids can stay through senior high school and take the college entrance exams in the cities where they grow up. That way, he says, they have a better chance of reaching their highest potential, which in turn benefits the urban economy.

Not so fast, says a Shanghai native named Qian. He’s a 30-year-old father of three, the second and third were twins, and he’s been protesting online against proposed legislation that would allow migrant kids to stay in Shanghai and take their college entrance exams here. He says it would make life harder for his kids.

“Actually, there already is an impact,” Qian said. “The maximum class size at my daughter’s kindergarten is supposed to be 25. But now there’s 35 kids per class, because of all the migrant kids coming in.

Migrant children are now allowed to go to public schools up through ninth grade in the city where their parents are working — a fairly recent development.

“And then, public transportation is crowded with migrants,” Qian continued. “And the hospitals are overburdened. Shanghai is already an aging city, and the medical resources are designed for a city of 10 million — not the 23 million or more we have now.”

And why should Qian’s children suffer, he asks, when his parents and grandparents helped build Shanghai into what it is today? Qian insists he’s not entirely unsympathetic to migrants. Reforms are needed, sure, he says. But it’s impossible for everyone to get benefits immediately.

“Maybe these people’s interests are hurt in the short run, but there will be more people enjoying the benefits in the future,” he said. “That’s how it goes.”

That how it used to go — but the equation has changed, says Tom Miller, author of the book “China’s Urban Billion.”

“For the last 20 years ago, basically, it made sense for China to urbanize on the cheap, treat migrant workers as economic cannon fodder, and this was the major reason behind the so-called ‘China price,’ that China could create any kind of cheap manufactured good more cheaply than any other country,” he says. “That’s going to change now partly because of rising labor costs. And I think socially, this is potentially a time bomb. If these people who want to become full-time permanent urban citizens realize that the game is permanently stacked against this, China will potentially have a big social problem, and a big political problem, on its hands.”

Shanghai has gotten that message. Besides the risks of instability, Shanghai’s official residents are having less than one child per couple — so its base of consumers will start to shrink if at least some migrants aren’t empowered to stay and spend.

So Shanghai has started dividing migrant workers into classes. The ones who are the most educated or talented – Class A — get the Shanghai hukou. The slightly less talented – Class B — might get a hukou after seven years of paying into the social security system. And the ordinary shmoes who build the buildings and clean the apartments and sweep the streets? They’ll have to wait longer.

Of course, some farmers got lucky. They didn’t have to come to the city and wait for a hukou. The city came to them.

Farmer Li Jinqi, 68, was born in a village, raising pigs and chickens and growing vegetables. Where his family’s house once stood is now a six-story apartment building is a busy urban neighborhood. But he hasn’t forgotten his old village. He’s written four memoirs, illustrated by hand, about the village, and his own life.

As a village kid, Li saw the Communist Party come to power. As a teenager, he became a barefoot doctor, then worked as an accountant for a collective farming unit. Then Mao Zedong died, and economic reforms began, and the city expanded and swallowed Li’s village. He was given an urban hukou, and an apartment in a building where his family’s home used to be. Not a bad life, he says.

“Urban residents have it better than farmers,” he said. “We have pensions. We don’t have to farm the land anymore. We don’t have to work so hard.”

Li is fairly unsentimental about the disappearance of his childhood home, and the village way of life — though he does remark, wistfully, that people don’t hang out and chat as much in the evenings, when they have to walk down five flights of stairs. He also a little worried about crime — new migrants moving in, he says.

But he doesn’t think its time to end the hukou system, so other farmers who want to become urban residents can enjoy the social services he does now.

“The hukou system is necessary,” he said. “Without it, the country couldn’t control its population. Every country should give each person a hukou, and control their movement. Otherwise, there’d be chaos.”

He’s surprised to learn most countries don’t, in fact, control the movement of their citizens. He rejects the notion that it’s a relic of an era in China’s communist rule that perhaps no longer fits modern times.

“We Chinese used to live in a feudal society where the emperor himself decided everything. That was barely more than 100 years ago,” Li said. “In China, there is always regulation. In a family, the oldest one regulates. In a production team, the team leader regulates. In a village, the village chief regulates. We’ve been doing it this way for thousands of years. Everyone needs limits.”

The 16-year-old migrant girl with a flair for music and great expectations might disagree. She, and millions more of her generation expect better — and China’s new leaders know that China’s future, and the Party’s, depend on delivering it.