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Hukou Reform and Urbanization

Hukou Reform and Urbanization. Yang Yao CCER/NSD, Peking University. What is the Hukou. Household registration Established in 1958 to prevent free movement of people, especially from the countryside to the city. A person gets his/her Hukou in the city or village where he/she was born.

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Hukou Reform and Urbanization

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  1. Hukou Reform and Urbanization Yang Yao CCER/NSD, Peking University NYSE, January 7, 2013

  2. What is the Hukou • Household registration • Established in 1958 to prevent free movement of people, especially from the countryside to the city. • A person gets his/her Hukou in the city or village where he/she was born. • Since 2003, most of the restrictions/benefits associated with the hukou were eliminated • Currently, children’s education and access to welfare are the two most significant benefits associated with the Hukou. NYSE,January 7, 2013

  3. Reform initiatives • A reform announced on February 23, 2012 • Migrants can apply for the local hukou in small cities once they have a stable job and a place (including a rented home) to live; • Migrants can apply for the local hukou in small cities once they have worked and lived there for three years; • No change for large cities. NYSE,January 7, 2013

  4. College admissions • Up to now, 18 provinces (including Beijing and Shanghai) have announced new policies toward college admissions for migrant children • Some are radical requiring only one year in local high schools to qualify taking the college admission exams in the province; • Some are conservative only allowing migrant children to go to technical colleges. NYSE,January 7, 2013

  5. Why is the reform significant? • It is about getting rid of a policy that have separated people by their birthplaces for the last half century. • It is also about transforming the Chinese economy • Speeding up urbanization • Accelerating structural change • Boosting domestic consumption NYSE,January 7, 2013

  6. More than half of the population lives in the city since 2011

  7. Income and urbanization in low and medium income countries (2009) China’s urbanization lags behind of its income level when compared with other countries China Source: WDI.

  8. Rural-urban migration: 1993-2011 (mil.) Source: China statistical Yearbook.

  9. Agricultural employment is still large Source: www.stats.gov.cn .

  10. A potential source of growth • Boosting domestic consumption • An urban resident on average consumes 2.57 times of his counterpart in the countryside • If the 160 mil. migrants obtain hukou so their consumption is increased to the level of people with hukou, then national consumption would be increased by 11.8% • This means that the share of consumption in national GDP would increase to 52.2% from 48%. NYSE,January 7, 2013

  11. Challenges • Conflicts between local residents and migrants • One group’s gains imply another group’s losses • Stresses on local public finance • Schools, transportation, housing, police, sanitary facilities, environmental protection, etc. • Land ownership • Privatization/incorporation of land will accelerate in advanced rural areas NYSE,January 7, 2013

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