BEIJING, China: Amid a sluggish property market and slowing consumption, in recent months, Chinese authorities have urged large cities to abolish or relax the issuance of the urban residency permit known as a hukou, the internal passport system that has limited people’s opportunities to their places of origin since the 1950s.
The move aims to loosen restrictions and grant more people the opportunities urban registration provides.
In August, the Ministry of Public Security called on cities with up to three million people to abolish hukou and those with three to five million to significantly relax issuance.
Zhejiang and Jiangsu provinces have announced plans to open almost entirely to new residents.
However, Reuters reported slow progress, especially in China’s larger cities.
Despite acknowledging the solid economic rationale for the change, Chinese officials have hesitated, as abolishing hukou might disrupt social stability and place extra financial burdens on indebted cities.
Jia Kang, founding president of the China Academy of New Supply-Side Economics, who advises the government on policies including hukou, said, “Hukou reform is a hard bone to chew. It should be a natural process, it is not something you can do simply because you want to. Currently, all reforms are difficult.”
While neither the central government nor local governments oppose further hukou easing, implementation depends on cities having the funds and public service capacity, Jia added.
China’s largest cities have limited residential capacity and suffer from pollution and congestion, affecting their ability to absorb more people. Meanwhile, medium-sized and smaller cities have excess housing stock they could offer to new residents, but surging debt means they lack the funds to expand access to health facilities and education.
As the country opened up to entrepreneurship and invested in transport infrastructure and residential projects, most Chinese cities grew dramatically over the past four decades. But the world’s second-largest economy has still not reached the 80 percent to 90 percent urbanisation rate in developed countries.
Official data show that some 65 percent of China’s 1.4 billion people live in urban areas, compared with 55 percent in 2013, but only 48 percent of the population have a hukou.
