Shanghai's latest reform of its hukou system on February 23, 2009 was the fourth adjustment since 1994. To qualify as permanent residents, applicants must have held a temporary residence card and contributed to the city's social security system for at least seven years. Applicants must also be taxpayers, have vocational qualifications, a good credit history and no criminal record.

"I have been looking forward to the new hukou policy for years, but it turned out a complete let down," said Tian Xiaoqing, a migrant worker who has been in Shanghai for ten years. He only obtained his temporary residence card in 2004 and cannot get a hukou because his documented residence is less than seven years.

The authorities estimated that only around 3,000 people would qualify for hukous under the new regulations, but even out of this tiny number, only a few meet all the other requirements. Many are saying the reform was enacted "for show".

"It was not done for show at all," protested Wang Daben, an associate professor of Population Research Institute at East China Normal University (ECNU) who took part in the research for the reform.

Wang said the problem is that the hukou system and social security systems are intertwined. "The new hukou policy could enable tens of thousands of people to qualify for permanent residency every year, but only if tens of billions was transferred into the social insurance fund."

He said few people qualify for permanent residency right now but numbers will increase as time goes by. The hukou policy has starved Shanghai of new talent and will inevitably be loosened in the future, according to Wang.

Social stability at stake

Shanghai has a population of 19 million people, 6 million of whom do not have a permanent residency. But Wang insisted change must be gradual if social stability was to be maintained. He said regions that took big leaps in hukou reform often had to backtrack later after a destabilizing influx of rural residents.

It is not just migrant workers who are demanding permanent residency. Spouses from other provinces and children of former Shanghai residents who were sent to the countryside to help develop backward areas are two other groups. But if hukou restrictions were abolished, the Shanghai government would have to finance medical care, provide affordable housing and so on, which would stretch local finances.

Wang said the new rules are a step forward and will be relaxed in future. Shanghai's permanent population has begun to decline in absolute terms, easing population pressure on the city. He suggested an evaluation system to grant hukous to well-qualified workers.

Diminishing the value of the hukou

Many experts think no meaningful reform of the hukou system is possible unless the link between residency and social security is broken.

Social security, social welfare and social relief are all financed by local governments and only permanent residents qualify. Given massive regional disparities in wealth, areas with relatively high levels of social security provision risk being overwhelmed if permit restrictions are loosened.

Only when the gap between the rural and urban social security systems is bridged, can an equitable solution be found, said Wang.

(China.org.cn by Fan Junmei March 19, 2009)