Everything about China is very large, including the numbers of people who shift from one part of China to another. Such internal migration is subject to controls so that the authorities know how many people have been given permission to move across country/town borders and between towns. The data are quite difficult to get and often inconsistent. However, the scale of change is indisputable.

 

Moving the registration of the household (hukou) needs the approval of both the original place of registration and the new. That number has been relatively static at about 17-20 million people since 2000.

 

Needless to say, the ‘non-hukou’ movements are much larger – the report suggests it could be as high as 200 million. These are people who have moved without getting the required permission.

 

The reasons for these large numbers of internal migrants are as expected: jobs and higher wages:

“The choice for rural migrant labour is mainly between a farm job (or no job) at home and a low-end job in the cities. Rural migrant labour moves across different geographic scales to make monetary gains, which can broadly considered in terms of the balance of the wage differentials and living cost differentials between the origin and the destination. Most of them go to nearby towns outside the villages; others cross thousands of miles to big cities on the coast.”

 

“Our analysis is consistent with the thesis that more migrants moved to distant provinces to reap benefit of the large spatial differentials of wages in China as they had acquired more information and built their networks. At the same time, long-distance migrants were increasingly concentrated and converged into one single province, Guangdong, in the 1990s, which has since become the core of the ‘world’s factory.’ ”

 

As with international labour flows, the position of the ‘sending’ provinces has improved from the remittances:

“I have argued that migration helped to narrow regional economic disparities. This is different from the existing wisdom of rising migration and simultaneous increase in disparities in China. From a human capital perspective, it is important for the Chinese government to continue promoting education and migration as a way to narrow the gaps between the coastal and inland provinces.”

 

Of significance to PensionReforms is that these very large flows of people may lead to reforms of the hukou system that hasn’t adapted to the new environment.

“Almost all the changes to the hukou system and new initiatives have had only marginal impact on weakening the foundation of the system – i.e. the separation of two segments of population and discrimination based on that. The hukou system, directly and indirectly, continues to be a major barrier in preventing China’s rural population from settling in the city and in maintaining the rural-urban “apartheid.” This problem has become more acute as rural migrant labour has turned more and more permanent …”

 

The significance is that the non-hukou are generally not entitled to participate in local social programmes like health, education and welfare, including age pension arrangements. The report suggests that, while the central government may want to end such discrimination, “… it is questionable that local governments are ready to implement any sweeping change to the hukou system.  China cannot abolish the system without a significant change of the rural-urban politics and economics.”

 

The report notes that,”... in the early 2000s, several provinces and cities such as Guangdong, Beijing, Shanghai, and Xiamen started to set up limited social security schemes to cover rural migrant labour. By the end of 2005, about 14 million, out of more than 100 million rural migrant workers, had joined some form of pension schemes.... [A]ll the pension schemes are not portable, and given the high mobility and turnover of migrants in work, one wonders if any migrant will ever be eligible to collect the benefits when they get old.”

 

Because all the schemes require migrant workers to have worked for 15 years in a specific city to be eligible for pension, a migrant moving from one province or city to another could easily end with no or limited pension rights. PensionReforms can see why the local governments might not want to change that system.

 

The central government recognises the problem:

“... the most flagrant abuses associated with the existing hukou system, which left unreformed, could seriously jeopardize the lives or livelihoods of migrant labour, and perhaps disrupt “social harmony.” But these local cases also illustrate the contradictions of the new localized hukou management system that can – and often does – counteract the central government's rhetoric.”

 

As PensionReforms has pointed out before (see here and here for example), China’s national ‘solution’ to the pensions issue isn’t working; neither apparently is local income support that depends on the hukou system. Something will have to change otherwise there will be another huge statistic in China – the number of elderly poor. At least they can’t vote. (File size 538 KB; 32 pp) 384