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- DTN Headline News
China Reform May Add Demand
Wednesday, August 27, 2014 11:27AM CDT

By Lin Tan
DTN China Correspondent

BEIJING (DTN) -- Even though Jinlong Han owns five restaurants and has worked in Beijing for 33 years, he must pay extra for his 12-year-old daughter to attend school despite the fact she's one of the best students in her class.

His family household registration, called a Hokou, is in the rural region of Inner Mongolia, which prevents him from accessing public services like healthcare, insurance and education in China's urban areas.

"I will send her to Canada for a better education after she finishes middle school," Han said.

The Hokou system has been a restriction on Chinese migrating from farms to cities for the last 55 years. Unlike Han, most migrant workers can't afford to send their children abroad for education. They're mostly lower-income laborers who are locked out of social programs because of their rural registrations.

But that's about to change. China's government recently decided to unify its agricultural and urban citizenship and end the discrimination against farmers who leave their land. The decision could change China's population distribution and increase its meat consumption while letting farmers manage their land after they move to the city.

"We have three hundred million migrating workers who live in the city but do not belong to the city, because their Hukou is registered in the rural area as agricultural residents," said Wenge Fu, a professor at China Agricultural University in Beijing.

"The new system will allow more farmers to settle down in the urban areas and allow some farmers to buy or rent more land to farm in a larger scale," Fu said. "In the meantime, the increasing urban population will have more purchasing power in the future."

China faced two issues in Hokou reform, Fu told DTN in an interview: 1) Maintaining farmers' rights to the land; and 2) Ensuring that migrating farmers receive the same social welfare after they settle in the city.

Although Chinese farmers do not own their land, they have the right to farm a piece of land according to the number of family members in their household, which usually works out to about one acre. The reform guidelines confirm that farmers will keep the right to manage their land after they move to the city. That means they can transfer land management responsibilities to other farmers.

"This will be good for some farmers to collaborate farming land for large scale production," Fu said. He added that China's farmland is already under intensive production, so scaling up might not increase overall productivity. The country will still need to increase food and feed grain imports.

China's government expects more than 100 million people to change their Hokou from agricultural residents to urban residents in the next five years, posing a big challenge for city governments.

"Big cities, like Beijing and Shanghai, are already over populated with heavy air pollution and traffic jams," said Fu.

The guideline allows migrants to settle in towns and small cities with population under 500,000 freely. Migrants will face more restrictions if they want to settle down in larger cities. Those who want to get into cities of more than 5 million people will need to have a stable job for a certain period of time and own or rent a residence in the city they wish to live before they can transfer their registration.

China's communist party started the Hokou system in 1958 to separate the country's rural and urban residents. It required each person to register in a local public security office where they lived, and people weren't allowed to change registration location if they moved.

After China's economic reforms and factory boom, more and more farmers left their villages in search of higher incomes in the city. The Hokou system prevented the country's 300 million migrants from receiving the same public benefits as urban residents, which restrained urbanization and domestic consumption. Statistics in China show that urban residents have higher purchasing power than agricultural residents.

Fu believes the newly added urban residents will consume more protein in their diet, supporting China's livestock markets and imports of soybeans and other feed grains.


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