Comment: An end to China’s apartheid?

For over half a century, the Chinese Communist Party has sought to control where Chinese people live under the hukou system of household registration, which has separated people into two distinct groups — those with rural ‘passports’ and those with urban ones.


While the Afrikaans term ‘apartheid’ may be a harsh way of describing this system, its literal meaning — ‘the state of being apart’ — suggests that it is also fairly apt.

Even though millions of rural citizens have made their way into Chinese cities in recent decades, hundreds of millions more are still unable to do so.

As a result, rural Chinese currently earn on average around one third of their urban counterparts, with the vast percentage of the 185 million Chinese people living on under US$1.25 a day residing in rural areas. These disparities simply would not exist in an economy with perfect labour mobility since migrants would continue to head for urban centres as long as the wages there were higher. The hukou system prevents this equalising force and is therefore a major source of China’s rural–urban income inequalities today.

China’s top leaders are well aware of this fact and are deeply contemplating hukou reforms, as evidenced by a report released following a meeting on 12–13 December of the Communist Party’s 18th Central Committee, headed by President Xi Jinping. The report, which reaffirms China’s commitment to an urbanisation strategy that will drive economic growth in the decade ahead, claims that the government will allow migrant workers who live permanently in cities to gain urban residency status ‘in an orderly way’.

It is clear, however, that there are no plans to abolish the hukou system altogether. Instead, cities have been divided into four categories: hukou reform will focus on ‘fully open’ small cities and ‘orderly’ mid-size cities, but big cities and megacities will continue to have strictly controlled hukous. In other words, the government is not prepared to relinquish all control just yet.

This is understandable, given the enormity of the challenges facing both central and local governments as China embarks on a plan to shift 250 million more rural people into urban areas by 2025, in addition to the 200-plus million migrant workers who already live in cities but are largely excluded from the education, healthcare and social welfare services available to urban hukou holders.

Given these figures, a comprehensive ‘big bang’ approach to granting urban residency to anyone who wanted it, in any city they wanted to go, isn’t a realistic option. The pressure on cash-strapped city-level governments would be far too great and, although new ways for them to raise funds are underway — including tax-system reforms and the establishment of financial institutions to support urban infrastructure and housing — these will clearly take time.

Instead, hukou reform is likely to continue in the gradual, piecemeal and experimental way that has characterised China’s 35-year-long transition towards a market economy.

In Chengdu, for example, a new system of land credits that enables farmers to swap their rural land for urban housing has led to regulations issued in late 2010 that enable all Chengdu citizens — including five million farmers — to move freely into the city and register as urban citizens, receiving all the benefits that go with it. As Tom Miller points out in his 2012 book China’s Urban Billion: “If the Chengdu government is as good as its word, this would represent a huge breakthrough for hukou reform”.

Other experiments include the use of points systems for migrants, first introduced in Shanghai in 2004 and in Guangdong province in late 2010, under which urban residency status is granted to those migrants who achieve a certain number of points based on their employment, education, income and other (mainly economic) attributes. Although points systems can be justified on efficiency grounds, the distributional consequences are likely to be dire: creating an underclass of the already second-class rural Chinese who don’t make the grade. Whether points systems should be allowed to spread across the country is something the central government in Beijing will need to consider very carefully.

As the most recent indication of gradual reform, a news release by state news agency Xinhuanet on 18 December indicates that the Ministry of Public Security and 11 other ministries and commissions have drafted reform guidelines for the hukou system that aim to establish a new system by 2020. If approved by the central government, the new system will be based on a person’s place of residence and employment, not their birthplace. This is a positive sign for those migrants already working in cities, albeit requiring some patience. What it means for the 640 million people still residing and working in rural China is another question.

This latest string of announcements came shortly after the death of Nelson Mandela, who led the decades-long struggle to abolish apartheid and secure a multi-racial democracy for South Africa. President Xi Jinping has the opportunity to end China’s own form of apartheid, and may well become a national, even if not an international, hero in the process. The challenges are immense, but not insurmountable.

Dr Jane Golley is associate director at the Australian Centre on China in the World, ANU College of Asia and the Pacific.

This article was first published at East Asia Forum, a blog from the ANU College of Asia and the Pacific examining politics, economics and society across Asia and the Pacific.