China Pushes Forward Residency Reform, China National Radio Says

China plans to end residency restrictions in small towns and introduce “reasonable” policies for the largest cities, China National Radio reported yesterday, citing the nation’s leading economic planner.

The government will gradually ease limits on residence permits in the smallest towns before moving on to medium- and larger-sized cities, Xu Shaoshi, the chairman of the National Development and Reform Commission, said in a report to the standing committee of the National People’s Congress.

The move is part of a broader push by China to reform its residence-permit system, known as hukou, which mandates that people can only get most health and welfare benefits in the place where they are registered, usually at birth. Hukou reform may also narrow the income gap between rural and urban residents and help Premier Li Keqiang in his effort to promote urbanization and domestic consumption as drivers for the world’s second-largest economy.

The new measures will enable rural residents who meet certain requirements to become city dwellers instead, China National Radio said in the report, citing Xu.

The hukou system, imposed under leader Mao Zedong in 1958 to bind farmers to their land, prevents the country’s tens of millions of migrants from putting down roots in the cities where they work because they can’t get government help or send their children to school for free.

China’s biggest cities, including Shanghai, Beijing and Chongqing, have yearly quotas on the number of people allowed to become residents.

— With assistance by Liza Lin

Before it's here, it's on the Bloomberg Terminal.