China’s Permanent Residency Syndrome: Chengdu As A Pilot City For Reforms

By Dr. B.R. Deepak

In any major agrarian society, the agricultural productivity is lower than the industrial and service sector productivity. Therefore, it is obvious for the rural labor force to move towards non-agricultural sectors. The process plays an important role in the income distribution and regulation.  And, since most of the non-agricultural sector employment opportunities are concentrated in cities and towns, the rural labor force tend to move to these centers of economic activity.

In India, the constitution protects the labor mobility from countryside to the cities though such a guarantee has resulted in large slum dwellings in the Indian cities with pathetic living conditions. In China, there exists various factors, rather remnants of rural-urban binary system that hinders and discourages the mobility of rural labor force to the cities. One such system is the Household Registration system (huji guanli zhidu HR System) or the Permanent Residency System established during the planned economy era.

The 1958 constitution amendment pertaining to Household Registration in China divided the rural and city dwellers as “Rural Residents” (nongye hukou) and “Non-rural residents” （feinongye hukou）and stipulated that the rural citizens migrating to cities must carry an employment certificate from the city labor department or a migration certificate issued by the concerned household registration department of the city, meanwhile should apply for migration procedures in the local permanent household registration office. Another blow was dealt to the rural migration in 1975 during the “Cultural Revolution” when rural mobility to cities was scrapped altogether.

The HR system, therefore, penetrated so deep into every segment of social life that the supply of consumer goods and means of production, education, employment, housing, labor insurance, and all other welfare needs depended on this system. The system not only provided the “social stability” in a larger sense, but also provided “political stability” in the cities. For example, “politically unreliable elements” were sent to the villages, and even intellectual youths were dispatched to the villages through various political movements when cities could not generate enough employment opportunities for them, obviously in the garb of re-education in labor camps. It is recorded that after 1962, some 60 million city labor force were sent to villages; between 1966 and 1976 another 16 million city intellectuals were dispatched to villages; and in 1988 during the “rectification and consolidation” campaign some 70 million rural folks working in the cities and townships were driven back to the villages.

Academicians in China are of the view that the HR System has further scuttled the smooth operation of the “market economy” in China. According Huang Weihong of Guangdong Zhongkai Rural Technology Institute, 1/5th of the US population move from one place to another in a year, but in China the figure is just 0.5%-3% a year. Criticizing the system, the Chinese scholar says that the “HR has trampled on the basic right of the people and has violated the principle of equality.” Not only this, the government while extending food price subsidies, preferential prices, supplies and privileges to the urban population is at the cost of the income and accumulations of the 800  million peasants. Since 1940s, every year the peasants were ripped of 26 billion renminbi (RMB), which was transferred to the cities as financial subsidies. In recent years the amount has surpassed 60 billion RMB. Therefore, the worker-peasant alliance has merely become an empty political slogan.” “The long term phenomenon of “landlessness” (wutian kegeng) and “no skilled force” (wuji xuren) might drive some peasants to take extreme steps.” Therefore, if the HR system is not overhauled, any endeavor to solve the “three rurals”, an acronym used for agriculture, countryside and peasants in China would be tantamount to taking totally ineffective measures, asserts Huang.

Although in recent years the Chinese government has initiated some measures to release the rural labor mobility due to immense need of infrastructural development in the cities, the measures are “administrative” rather than those governed by the economic principles. In an attempt to “transform rural residents into non-rural” (nongzhuanfei), the government has stipulated that such transformation should not exceed 1.5% in a year. Another measure adopted by the government since 1997 is the “urbanization” (chengzhenhua) of small townships and HR reforms. Some Chinese scholars such as Wang Xiaoyun and Gan Qiming have argued that it is important to accelerate the urbanization drive so as to enhance the income of the farmers. They try to justify the “urbanization” drive by presenting a case study of Ganzhou Township in Jiangxi. According to them, by the end of 2005, the urbanization level of Ganzhou reached 31.06% and registered a growth of 9.06%. Ganzhou may be an exception as the population is small and forest cover huge (around 74.2%).

Since the average number of enterprises in townships nationwide is miniscule, the employment opportunities are very few. Moreover, the townships do not have the appeal of the mega cities to attract labor force. Since these measures smack of conservatism of the planned economy era, new liberal measures that allow the free movement and equal opportunities and competition on the basis of free market economy as regards the HR system need to be urgently initiated. In this context HR System reforms initiated by Chengdu in Sichuan is a welcome step. Many metropolis across China have seen millions of “outsiders” with their families residing in the cities having registered houses and cars etc. are still being deprived of local permanent residency.  Rich people are better placed as they can afford to pay for their sibling’s education, health and other social securities, however, the farmers, and especially the immigrant laborers without a Hukou have to pay a considerable sum of extra amount if they would like their children to attend a city school.

A proposed plan by Chengdu government will ease such concerns, for on 14 November 2010, Chengdu released a working plan on the free migration of its residents between urban and rural areas starting from the year 2012. China Daily reported in its online edition on 19 November 2010 that being a pilot city for HR reforms since 2003, more than 2 million people have acquired permanent residency in Chengdu. According to the plan, not only the migrant workers but farmers too would be able to register as urban residents, even though they have land and houses in the countryside. Conversely, urban residents would also be able to register as rural residents with proof of residences in the countryside. Once implemented, the plan will make it possible for more than 5 million rural residents in Chengdu to enjoy the same social security and public services such as education and healthcare, as their urban counterparts.

If successful, the plan is likely to be implemented by other provinces and many more cities across China, and could be adopted as a national policy in near future by the Chinese Government. If adopted across China, it would be in the first time in the history of communist China that the discriminatory barrier hindering the free movement of rural folks would be broken, and release the rural population from the shackles of being treated as “second rate citizens” in China. The plan is also likely to face stiff opposition from the urban population, as the move may result in a major influx of rural residents into the cities, putting increasingly unbearable pressure on the already congested metropolis like Beijing and Shanghai.

Will Chengdu plan revolutionize the HR system in China the way Anhui Household Responsibility System revolutionized the agriculture sector during mid 1980s?  We will have to wait and watch!

The author is the Associate Professor in the Centre for Chinese and South East Asian Studies , Jawaharlal University, New Delhi.  He can be reached at [email protected]