A fresh round of what has been called a “war for people” is spreading across China, with major cities taking it in turns to ease residency requirements amid stubbornly low fertility rates and an ongoing property market crisis.
Chengdu, a southwestern metropolis with a population of 17 million – twice that of New York, will allow migrants to change their residency status as long as they buy a home in the city, according to a plan the city government released for public comment this month.
In pursuit of a larger population, it is granting homebuyers the right to relocate their permanent residency – as recorded in an identity document known as hukou that is tied to an individual’s social benefits – and gain access to local public services.
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A hukou registered in a major city has long been sought after, but it was previously difficult to obtain because the authorities in China used the rigid system to control population movement.
Chengdu’s potential policy change, with no planned implementation date yet announced, is the latest attempt at a “hukou for home” strategy adopted by city governments in the past couple of years as the competition for talent among localities becomes fiercer.
“The current competition is a continuation of the ‘war for talent’ that began in 2017 ... cities must retain a certain scale of population to support modern industries such as finance and culture,” said Lu Mingtao, an associate professor of economics at Capital University of Economics and Business in Beijing.
Falling birth rates and swollen real estate inventories are intensifying the need for an inflow of people as local governments struggle to bolster economic activity, he added.
Official directives that have been made publicly available suggest that almost all provincial capitals and many other prominent centres, including Hangzhou and Suzhou in eastern China, have extended residency rights to people who buy property.
Noteworthy examples also include Shenyang and Qingdao in the north, which have introduced even looser policies that grant residency to those who are renting.
Residency options have also been made more accessible in the mega cities of Beijing, Shanghai, Guangzhou and Shenzhen, as well as the municipality of Tianjin, which have either adopted the “hukou for home” policy in certain locations or eased their points-based residency systems.
The competition for talent began seven years ago, when cities like Wuhan and Chengdu implemented policies to attract university graduates, Lu said.
Now, a talent war has been reignited as localities seek economic viability in the face of changing demographics.
“The low fertility rate across the country exacerbates this competition, as fewer births mean local populations are dwindling, leading to increased rivalry in attracting migrants,” he said.
China’s population declined for the first time in six decades in 2022 and fell further last year, underscoring concerns about the growth prospects of the world’s second-largest economy. It reported a population of 1.409 billion at the end of last year – a 2.08 million decrease from 2022.
Lu said a large population is not only needed to cultivate innovative sectors, but also critical for local authorities as China pushes forward with tax reform in which “individual and corporate income tax, along with consumption tax, are likely to be the main source of survival for local governments”.
With the country’s demographic dividend diminishing, the central authorities are shifting to a new approach of encouraging more farmers to move to cities by promising them equal urban citizenship rights in a bid to stimulate consumption and maintain urban vitality.
In an urbanisation plan issued in July, the National Development and Reform Commission pledged to eliminate residency restrictions in cities with populations below 3 million, and ease requirements in those with populations between 3 million and 5 million.
For larger cities, the plan aims to refine points-based residency criteria, with an emphasis on social insurance payments and the duration of residency, while encouraging the removal of annual residency quotas.
Over two-thirds of China’s population lived in cities at the end of last year, but that included hundreds of millions of migrants who did not have residency status in those cities.
More from South China Morning Post:
- China’s pro-birth policies not yet enough to counter demographic crisis, expert warns
- China’s new urbanisation plan aims to energise economy, but is it ‘rash and impetuous’?
- China, in search of new growth drivers, considers urban residency reforms
- China’s property crisis forces local hukou reform, laying groundwork for national change
- China’s economy has entered ‘new new normal’, leading policy adviser warns in call for systemic reform
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