China Creates 100M More City Dwellers in Hukou Reform Measure

China took a major step in the government’s move to urbanise its population when the nation’s cabinet officially approved a plan to grant official residence in the country’s major cities for 100 million people.

The move by China’s State Council was announced on the Council’s website Sunday, and would grant urban hukous, or residency permits, to 100 million Chinese is part of the “national plan for a new model of urbanisation” which aims to have 60 percent of China’s 1.36 billion people living in cities by 2020. Although the government foresees the nation hitting this 60 percent target, it acknowledges that only 45 percent would have residency permits in those cities.

Official figures indicate that in 2012 some 52.6 per cent of China’s population lived in cities, with 35.3 percent of them having the necessary hukous.

China’s hukou residency permits are a critical part of the way that the government tracks its population and controls the provision of government services. Originally developed during imperial times and continuing in until today, hukous register each citizen as part of a household, and tie that individual to residency in a particular city. The system also remains in use in Taiwan, as well as Vietnam (where it is known as a hộ khẩu).

Announcement Revives Real Estate Stocks

The statement from the government had an immediate impact on the fortunes of China’s real estate developers, most of whom have seen their stocks slide in recent weeks as investors worry about the impact of an ongoing credit crunch.

Several of the country’s largest developers saw their stock rise today after news of the State Council decision was circulated, with giant Poly Real Estate gaining 1.43 percent in trading. China Vanke and other major developers saw gains following the announcement dissipate as investor pessimism closed in again later in the day.

The drive towards greater urbanisation in China has been a major driver for urban housing prices, with the gradual urban migration fuelling demand for more homes as well as inspiring investor confidence in future real estate values in urban centres.

Improving Benefits for Urban Migrants

In its statement the State Council declared that among the goals of its program is to “work hard to achieve 100 million rural workers and other permanent residents obtaining urban hukou”.

By granting the permits to workers who have migrated to new cities the government ensures that the migrants will have equal access to social benefits such as education and health care. In the absence of a hukou, a migrant worker’s children cannot attend public schools in their new city, nor can they secure medical care at public hospitals.

Before taking this step toward hukou reform, individuals wishing to change their hukous usually needed to have an application for an urban hukou sponsored by an employer who would need to prove that the worker had valuable skills which would justify relocating the migrant to the new city.