China’s recent economic growth has been underpinned by a historic migration. While the movement of rural farmers to urban factories has fostered growth, all is not well. Migrants tend to live worse off than their native counterparts, creating a worrisome lack of social mobility. Major Hukou, or household registration, reform is needed to counteract the problems migration has caused.
Current Hukou registration restricts entitlements and social welfare to one’s place of birth. This restriction creates a bifurcated lifestyle for migrants. For example, when children reach schooling age, they are sent back to their birth village to live with their grandparents. Both inferior schooling and psychological problems caused by parental separation contribute to the divide between urban and rural children. The Hukou system also limits healthcare to that available in one’s birthplace. Many migrants lack the cash needed to pay upfront at the superior urban hospitals, relegating them to the poorer healthcare of their birth village. Inferior schooling and healthcare only exacerbate the problems already present in migrant lifestyles.
Migrants tend to work harder and make less than their urban counterparts. Male migrants often work physically demanding jobs for long hours that pay very little. Many female migrants opt for work in low-level service jobs and, in some cases, prostitution. Urban Chinese live in modern apartments with bathrooms and amenities; migrants, however, live in “slums,” that, while better than counterparts in say India, are drastically inferior. While cultural differences may delay complete integration for a generation or two, immediate Hukou reforms could help lessen this inequality.
Changes in Hukou reform need to help bring the migrant quality of life up to the urban one. If Hukou continues to restrict one to one’s birthplace, then improvement to rural schools and hospitals is mandatory. However, a simpler option would be to allow changes in registration. Bringing rural schools and hospitals to the quality of urban ones would be a difficult feat, as it has not even been accomplished yet in the United States. Allowing changes in registration could quickly ease inequality. The solution may not be so simple, however. Could increased urban Hukou accelerate migration to a point where it is no longer sustainable? Are cultural differences too large for complete integration? A migration as massive as the one currently underway will obviously have societal consequences. The fact that these consequences need to be addressed for continued Chinese growth is not up for debate. The question is whether it will be done through Hukou reform, a new registration system, or some other way.
I recall reading something that stated this system could cause the largest group of an urban poor class in all of human history. Intimidating stuff.
With that being said, if China does amend this system how will they deal with rising costs, especially with an already aging population?
Or phrased more precisely, who will pay for healthcare? Do local governments have stable revenue sources?
It was my understanding, at least from Miller’s perspective, that the national government ought to shoulder a much larger portion of the costs of expanding the social safety net. Is this feasible? Or will the government continue to expect local governments to find a way to execute and pay for reforms?
Even if the national government shoulders some of the cost, where will China pull the doctors and resources from? I remember reading a research paper published on the use of acupuncture combined with anesthetics in Chinese hospitals to cut down on supply usage. This was also seen when Wei Jia got sick in Hessler’s book and the blood supplies were potentially HIV ridden. China would need to improve its infrastructure before a hukou reform, otherwise it would become swamped.
Absent fiscal reforms that give localities more discretion in taxing, any increase in expenditures will have to be met by the central government. Furthermore, income levels vary greatly, so what a local government in rural Shaanxi could provide would be small compared to Shanghai – not enough to pay doctors. So from that perspective, it also needs to be a national policy.
Separately, the healthcare system has not been static. Yes, there was a lot of HIV-tainted blood. Now that gets screened. Universities, including medical schools, have enrollments 4x or more their levels of 15 years ago. So there are more doctors. Just perhaps not doctors willing to work in truly rural areas – but the same is true for the US.
China will need to find a solution to the stagnation of their economic growth through a modernized Hukou system. As half of the country’s economic growth is based off of consumption, China is not utilizing its great potential for further growth.
“Rebalancing” is the jargon. But is 6-7% growth bad? Fewer deleterious side effects, more rationality in investment, and incomes still double in a decade (our rule of 70).