Here Comes Hukou Reform

Eliminating hukou restrictions will materially improve the lives of millions of Chinese, but the total impact is hard to estimate. It will help alleviate housing inventory in some third-tier cities, but most cities are not restricting home purchases at this time. A bigger impact may be felt by schools, since many Chinese parents living and working in a city will now be able to send their children to school in that city, instead of leaving them in their hometown. Since one of the planks of Li Keqiang's economics policy is to urbanize, this will open the door to greater population flows. If the U.S. dollar goes into a multi-year bull market, agricultural prices will face a constant headwind and that may push people into the cities. There are incentives to hang on to a rural hukou though, because they come with land rights.

State Council Releases Hukou Reform Proposal
A key plank of the regulation is to allow people to obtain permits for access to basic social welfare services in the place of their residence.

...Under the regulation reforms, the household registration system would be strictly regulated to control the population in mega-cities like Beijing, Shanghai and Guangzhou.

Small cities and towns would scrap the hukou system outright and other cities will phase out household registration measures incrementally.

Dating back to the late 1950s, the hukou system splits China's population of 1.3 billion people not only along urban-rural lines, but also along urban municipal jurisdictions.

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