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World China still faces ‘more serious’ problem of household registration system

Huang Feng poses with her grandson at a migrant workers' village in Beijing, China on Oct. 30, 2015. China has unwound its one-child policy, for decades a symbol of invasive and coercive government planning, but the shift has been met with a disinterested shrug from many younger couples. Huang, 52, said the rule change is very good because her son can have two children.

KIM KYUNG-HOON/REUTERS

In the hours after China said on Thursday that it would end its one-child policy, the Chinese Internet lit up with couples who laughingly promised a nighttime of baby-making to celebrate. By Friday morning, the cheer had taken on a bitter tinge. "Urgent warning: No rushing to bed to make babies, everyone!" one person warned. "The Party may have let us have a second, but the law hasn't yet."

Even as China promised to abolish its one-child policy, it pledged to enact in its place a two-child limit that will roll out across the country beginning next spring. The country's leadership wants to spur new child-bearing in the hope that it can avoid the economic hurt from an aging society with a shrinking work force.

But the likelihood that strict rules will continue to govern Chinese procreation underscores the unwillingness by Beijing to release its tight hold on its people's domestic freedoms. And the problems it faces from such a tight rein – which have become increasingly obvious as it attempts to reshape its economy at a time of slowing growth – continue to mount.

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In China, the era of population control, with all of its attendant issues, is far from over.

Nowhere is that more clear than in the tiny alleyway homes and run-down schools that house China's vast population of migrant workers, who see no escape from a set of rules that are arguably more restrictive than the one-child policy, and more damaging to the economy: the hukou, or household registration system.

It's a different form of population management less known outside China's borders, but it is still hugely influential inside. And the two-child policy does nothing to change it.

In China, each family is registered according to its hometown, a fact noted in a small registration book sometimes likened to an internal passport. That document serves as a geographic anchor, chaining people to their family's origins and the health and education services available in those places, no matter where they move later in life. Because urban residents are eligible for far better benefits than those in rural areas, that creates a tiered society, where birth determines first- and second-class treatment.

By limiting mobility, it also creates bureaucratic barriers to people hoping to pursue education and careers.

"The hukou system has a more serious impact than family-planning policy," said Hu Xingdou, an economist at the Beijing Institute of Technology and an outspoken advocate for reform of the system. "It is damaging the healthy development of a market economy."

The Chinese leadership is eager to build its economic future on a foundation of innovative companies and middle-class buyers snapping up consumer goods, rather than factories belching out products and smog. Those goals are outlined in the five-year plan communiqué released on Thursday that promised to abolish the one-child policy.

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"But the central question is, where is the new middle class going to come from to really generate this consumption?" said Kam Wing Chan, an expert at the University of Washington on the hukou system. Rural and migrant workers would be an obvious answer. But by maintaining its hukou system, China has kept large parts of its rural population out of the good schools and jobs that could raise them up the economic ranks.

"This is really a significant economic cost. China is losing, or is not tapping into, a significant engine of economic growth," Mr. Chan said.

China has in recent years sought to relax hukou requirements, and some cities now offer education to children of workers who stay a certain length of time and pay taxes. But many cities have at the same time tightened enforcement, actually worsening the circumstances for migrant workers.

The abolition of the hukou system has been blocked in part over worry about the cost of delivering proper schooling and health care to a migrant worker population that now numbers 254 million. Extending full benefits to a single rural-registered person raises lifetime government expenditure by roughly 100,000 yuan, or about $20,750.

But Mr. Chan said the gains from abolishing the hukou system would outstrip the costs.

Already, some Chinese cities are targeting hukou reform to boost economies. Chongqing, the sprawling southern megalopolis, has handed urban hukou to about four million rural residents in recent years, and in September it said it would provide the same social and public services to everyone, regardless of his or her origin. The city has linked those changes to its growth, which at 11 per cent in the first half of this year was the highest in China.

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"Chongqing is enjoying a bonus from its reforms of the hukou system," Mayor Huang Qifan told Caixin media in September.

But elsewhere, the barriers remain imposing. In Shanghai, a demanding points system determines eligibility for a local hukou. It's easier for some Chinese to gain citizenship to another country.

Zhang Songye, a 42-year-old principal of a school for migrant workers, has lived in Shanghai for 20 years. His hukou remains in rural Anhui province.

His school struggles to deliver education to others in similar circumstances. "The computers are older, and some of our projectors are broken because we can't fix them," he said. "Some of our teachers don't have teaching certificates."

It all translates to worse prospects in a country where school performance often determines the future. In Shanghai, "if you look at the kids' test scores in the migrant schools, it's 10 percentage points less," said Sebastien Carrier, the program director at Stepping Stones China, which organizes volunteers to help improve English skills among migrant worker children.

The hukou system also creates problems for the very entrepreneurial class China is trying to build up.

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At Beijing's iPinYou, which runs a bidding service for Chinese online advertising, the company is swelling its ranks by 50 per cent a year. It's exactly the kind of firm China's leaders want to see – innovative and growing.

But iPinYou has no quota to issue hukou to workers, unlike bigger and more established firms. "So it makes it harder for fresh graduates to join companies like us," chief executive officer Grace Huang said. The company has already missed out on promising candidates. "In that case, we will have to lose that talent," Ms. Huang said.

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