State Council calls for decoupling public services from hukou
Authorities are inching forward on hukou reform.
The latest: On May 22, the State Council issued guidelines to decouple access to basic public services from household registration (hukou).
ICYDK: Everybody in China has a hukou, which is usually tied to one's place of birth.
- For a long time, local governments only provided public services – including public education, affordable housing, and social insurance – to those with a local hukou.
- That meant that migrants could not access public services in the places where they lived.
More context: In recent years, central policymakers have called for reforms to give long-term residents – regardless of hukou status – equal access to basic public services.
- Local governments have been slow to implement these reforms due to the high cost.
The new guidelines call on municipal governments to address these barriers, but used highly tentative language, including:
- “Promote” the inclusion of migrant workers’ children in public preschool and high school education services
- “Promote” expanding public rental housing access to non-hukou families with stable employment
Importantly, the guidelines also stopped short of promising major new funding support, only saying authorities will:
- "Explore” allocating transfer payments based on factors including long-term resident populations for “eligible” public service items
Get smart: Expanding migrant workers’ access to public services would reduce their precautionary savings and help boost consumption.
- That said, fully implementing these reforms could add trillions of RMB to annual fiscal expenditures, and we do not see central policymakers willing to commit to that level of funding support.
Our take: Hukou reform will likely continue moving at a snail’s pace.