Is China finally ready to make some serious progress on reforming its restrictive household registration, or hukou, policy? That’s the decades-old residency system that gives all Chinese an official status as either urban or rural (as indicated in a small red passbook). On June 26, China’s powerful National Development and Reform Commission announced in a report on urbanization that “the government should gradually tear down household registration obstacles to facilitate the orderly migration of people from rural to urban areas,” according to the official Xinhua News Agency.
To date, the hukou system has not only discriminated against hundreds of millions of Chinese, making it difficult for them to live comfortable lives in cities; it has also been an obstacle to Beijing’s desire to reorient toward a more domestic consumption-driven economy. Even though China became a country with an urban majority in 2011, some 230 million of those now living in the cities still have a rural hukou. That means they do not have access to the same health-care and education benefits as other urbanites and often can’t purchase apartments or even get a driver’s license. As a result, most end up being big savers, in preparation for an eventual move back to the countryside—not the free-spending Chinese necessary for Beijing’s rebalancing policy to succeed.