UW professor devises reform in Chinese hukou system

By Imana Gunawan
Northwest Asian Weekly

UW geography professor Kam Wing Chan

At the heart of “the world’s factory” are 230 million rural migrants in China living below the poverty line. Currently, a University of Washington professor is trying to help them move to the cities, acquire equal opportunities and reform the Chinese national or even global economy.

Kam Wing Chan, geography professor at the UW, has been studying the Chinese hukou system for more than 30 years. The hukou, established in 1958 to control Chinese residents’ movements from rural to urban areas, is a record in the household registration system required by law in the People’s Republic of China. If rural residents wish to move the urban areas, they must obtain permission from the police and go through the relevant bureaucracies, which would give them rights to benefits such as unemployment, retirement, and even education in the city. Chan is looking for ways to reform the hukou system.

“Currently, there are about 230 million migrants who are working mostly in cities,” Chan said. “They stay quite long, usually a few years, but because they don’t have the hukou in those cities, then they are denied of basic services and benefits and therefore create a big problem for the migrants to settle.”

Millions of rural residents have been moving to cities in the last two decades, but remain stuck in low-paying jobs with little opportunity for advancement. Since the hukou status is also hereditary, the children of rural migrants only have as much opportunity as their parents do.

“If you don’t have the hukou, then you’re out of luck,” Chan said, adding that the registration system also separates the residents by class.

Last August, Chan spoke at the Chinese Academy of Social Sciences Forum on Economics regarding misconceptions about the hukou system. According to Chan, many think giving legal status to migrant workers will bankrupt China’s economy. He argued that this is not the case.

In the longer term, the hukou system can hold the economy back, Chan said. If millions of Chinese could move out of poverty and into the middle class, they would spend more money, thus rebalancing the economy.

In an article he published in Caixin, a major media conglomerate that covers Chinese financial and business news, Chan suggested using a 15-year timeframe and consider projections that the migrant population will reach 300 million by 2032. This would allow the country to transfer the household registrations of 20 million people per year at an annual cost of 2 trillion yuan, or 3.8 percent of the 2012 GDP.

However, the 15-year timeframe also assumes spending the 100,000 yuan of per capita social welfare and public service costs for the floating population in one year. Chan said the 100,000 yuan would be spent over the remaining lifetimes of the urbanized migrant population.

“Currently, the average migrant worker is between 27 and 30 years old. Assuming he lives for another 40 years, this 100,000 yuan would be split over 40 years, or 2,500 yuan each year,” Chan wrote in Caixin. “To transfer the permanent residences of 20 million people per year would cost 50 billion yuan, or 0.1 percent of GDP. This is approximately one-fifth the cost of the Beijing Olympic Games and something the country should be able to afford.”

Chan believes China can first focus on transferring the household registrations of young college graduates, who will pay more taxes into the social welfare system than they take out in the 15-year plan period. Skilled workers would make up the second phase, and low-skilled workers would be the third phase.

“I’m cautiously optimistic,” Chan said. “They have been debating this for almost 12 months now, so I’m hoping they can listen to some of these [arguments] and create some reform.” (end)

Imana Gunawan can be reached at info@nwasianweekly.com.

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