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China lowers urban hukou thresholds

(Global Times)    14:36, April 09, 2019

China is relaxing restrictions on hukou, or household registration, in second-tier and third-tier cities to help 100 million migrant workers obtain it.

The government is scrapping restrictions in large cities with populations between one and three million, and relaxing such restrictions in cities with between three and five million people in 2019, according to a circular issued by the National Development and Reform Commission on Monday.

The move is part of a comprehensive drive to promote China's new-type urbanization, which, among other goals, calls for helping 100 million people who currently live in cities but lack an urban household registration.

China has 88 cities with a population of over one million, according to a media report that cited public data in 2016. Seventy-five cities have a population of between one and five million.

The household registration is a crucial document entitling residents to purchasing real estate, registering vehicle, access to medical care, and public education. However, as the cities expand, governments are reforming the system to lower the threshold of hukou.

Providing incentives

Chinese analysts said the new policy will affect secondary cities and benefit rural migrant workers in cities.

"Relaxing hukou will facilitate skilled rural residents to flow to cities," said Ni Pengfei, an urban development researcher at the Chinese Academy of Social Sciences.

This year is decisive in realizing the goal of "building a moderately prosperous society in all respects," the circular said, calling for improving the urbanization rate by 1 percentage point. China has set 2020 as the target year to finish building a moderately prosperous society, with poverty eradication and GDP and per capita income double that of 2010.

In 2018, China's urbanization rate stood at 59.58 percent, according to the National Bureau of Statistics. In the same year, nearly 14 million rural residents who had moved to cities gained their hukou registration, according to the Government Work Report delivered by Premier Li Keqiang in March.

The rural population working in cities, those with a college education or vocational training, and migrant workers from other cities are categorized as key groups who will be encouraged to get a hukou in their current cities.

"The transfer of the agricultural population to cities would help improve the per capita arable land in rural areas, addressing the overcapacity of the labor force against the backdrop of increasingly smart and mechanized agriculture operations," Huang Yanxin, a retired official with the policy reform department under the Ministry of Agriculture and Rural Affairs, told the Global Times on Monday.

Newly urbanized rural population with better income will expand demand and boost economy, Huang said, noting that this trend would stimulate development in rural areas.

Yan Yuejin, an expert at E-house China R&D Institute, told the Global Times on Monday that the new policy is also expected to improve the housing market, which has been dented by a string of restrictive measures in the past two years.

In the January-February period, property sales by area in the country dropped by 3.6 percent year-on-year, NBS data showed.

"Demand in second- and third-tier cities is expected to rise significantly due to the new policy, and housing deals are expected to soar significantly in the second quarter in provincial capitals," Yan said.

Yan also said relaxing policies in second- and third-tier cities will herald a policy shift from restricting to encouraging those skilled labor force, with perks or incentives to be expected in the future. "Urbanization contributes about 3 percent to GDP growth every year."

The new policy will also likely intensify competition among Chinese cities for talent, a rising trend since 2017.

Mega cities are also urged to adjust their quota system to increase the scale of hukou endowments and streamline the points system for household registration. A white-collar worker in Beijing surnamed Wang welcomed the new policy as "it instills more transparency to the existing points scheme, but local-level implementation will determine its final impact." Wang said he has considered moving to Chengdu, Southwest China's Sichuan Province where he could get a hukou as soon as he lands.

A Founder Securities report says urbanization will create housing demand equivalent to about 610 million square meters a year in China before 2030.

Challenges

The circular also called for government to provide better public services. Huang pointed out that it is crucial for cities to match the population inflow with sound public services, especially in providing education, as well as affordable housing, rather than simply relocating those new urban residents.

Ni said registering the existing rural migrant working population will require better governance from city administrators, especially on basic public services, without overspending.

Local government debt in China in 2018 amounted to 18.39 trillion yuan ($2.7 trillion) in 2018, Ministry of Finance data shows.

"Once hukou restrictions are relaxed, cities must carefully manage properly land supply and improve management of its property market to curb any speculative trading," Ni said.

The building of city clusters, addressing the rural-urban divide, better investment and financing schemes for cities were also listed as tasks to be addressed in 2019.

Border city development

The document also urges speedier planning for the construction of border city groups north of the Tianshan Mountains in Northwest China's Xinjiang Uyghur Autonomous Region, and in the central part of Southwest China's Yunnan Province.

A Xinjiang urbanization plan for 2014 to 2030, which was reviewed and passed by Chinese development experts in October 2017, said city groups north of the Tianshan Mountains include the regional capital city of Urumqi and the Hami prefecture, and will form the country's westernmost city groups in China, the Ministry of Commerce website said.

Central Yunnan city groups, including the provincial capital city of Kunming, Qujing, will cover an area of more than 110,000 square kilometers, and the region is also home to the Chinese part of the 414 kilometer-long China-Laos Railway, the first overseas railway project to be invested, constructed and operated jointly by the Chinese side and directly connected to the Chinese railway network scheduled to be completed and open to traffic in December 2021. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Xian Jiangnan, Liang Jun)

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