I.

Introduction

This paper focuses on Chinas rapid urbanisation; the extent to which this is facilitated by rural to urban migration; and how the hukou, or household registration system, is compromising the fluidity of this urbanisation process. Whilst the geographic divide between agricultural and nonagricultural citizens has lessened, the wealth divide between these citizens continues to grow. Starting with a summary of the hukou system, the focus will then turn to recent rural-urban migration trends, evaluating both their negative and positive implications. Both short and long-term solutions will be suggested for the problems presented. II. Urban to Rural Migration in China and the Hukou System The Evolution of the Hukou System Chinas prevalent rural to urban migration trend must be grasped within the context of the hukou system and its evolution. Chan and Buckingham (2008, p. 582) describe the hukou system as an institution with the power to restrict population mobility and access to state-sponsored benefits for the majority of Chinas rural population. Since the Communist party came in to power in the 1950s, Chinas citizens have been subject to hukou classification a permanent residence registration system. A key function of this system has been to divide two discernable strata of citizenry those of urban, and those of rural descent (The Economist, 2010). For example, the first organising principle of hukou registration is hukou type (nongzhuangfei) basically, whether a citizen is of agricultural or non-agricultural nature (Chan & Buckingham, 2008, p. 587). Another key function is its role in registering not simply where people live, but where they are registered. This has allowed the central government to both plan migration to some extent, as well as make policy based on distinctions between local and non-local/agricultural and non-agricultural citizens. In the first three to four decades of the system, it was this distinction that ultimately defined ones relationship with the state and eligibility for an array of state-provided socio-economic benefits (Chan & Buckingham, 2008, p. 588). More specifically, those designated with non-agricultural status were entitled to state-provided housing, employment, grain rations, education and access to medical care as well as other social welfare benefits (Chan & Buckingham, 2008, p. 588). On the other hand, those with agricultural status were expected to be self-providing, receiving little help from the state (Chan & Buckingham, 2008, p. 588). From the 1950s, this mechanism was used by the government to minimise political unrest in urban areas. That is, it limited the number of people who had access to low-priced food, guaranteed non-agricultural employment, and subsidized urban housing social benefits, such as basic social security and subsidized public services (Cai & Wang 2009, p. 247). Whilst there were also legal constraints on migration, the hukou system achieved similar effects in different ways; ways that also deterred unofficial migration. A citizens location did not change their hukou type or place of registration this remains mostly true today. More specifically, to be classed as agricultural or non-agricultural depends on the place in which one is registered (Liang, 2001, p. 500). Furthermore, changing ones place of registration, for rural to urban migrants, requires first changing ones hukou type, from agricultural to non-agricultural (Liang, 2001, p. 501). This, in turn, is subject to stringent conditions that include governmental approval 1 (Chan & Buckingham, 2008, p. 596). Given that agricultural hukou at this time relied on grain-rationing from their local commune for survival, immigrating to urban areas illegally or otherwise was not

Otherwise known as nongzhuangfei.

feasible given the closed-market system (The Economist, 2010). As Chan and Buckingham (2003, p. 588) suggest, this mechanism served to curb migration outside the state plan. Reform of the hukou system in the past three decades both direct and indirect has eroded many of the practical barriers to rural-urban migration. The great surge of industrial growth after the 1979 economic reforms is a key factor this has made it necessary for state owned and private enterprises to seek labour outside of urban areas (Rush 2011, p. 29). Likewise, the labour surplus following agricultural reforms has encouraged many with agricultural hukou status to immigrate to urban areas (Rush 2011, p. 33). In general, policy reform and economic restructuring has slowly changed the role of hukou status in China. For example, in 1992 the food-ticketing system was abolished (Chang and Zang 1999); this followed agricultural reforms that boosted production output and made it an untenable form of regulatory policy. This had previously meant that citizens were only qualified to receive staple foods if they stayed in their local hukou area. However, when the ban on markets was lifted this opened up opportunities for setting up small businesses and, eventually procuring grain outside the rationing system (Hussain, 2003, p. 10). As Chan and Buckingham (2008, p. 589) note, the nongzhuanfei label lost much of its substantive and symbolic significance in hukou migration as a result. Additionally, the increased localisation of hukou registration management has been a catalyst for change. In being granted the power to set their own criteria for hukou registration, some local governments have sought to abolish the nongzhuangfei distinction (Hussain, 2003, p. 7). That is, some smaller urban centres have awarded a permanent change of registration bypassing the nongzhuangfei process to otherwise non-local agricultural workers within the centre, as well as the centres periphery units (Hussain, 2003, p. 7). Despite these changes, it is generally accepted that the hukou system still provides significant barriers to internal migration (Rush 2011, p. 33). For one, whilst some local governments have abolished the nongzhuangfei distinction, these have all been smaller urban centres (Garcia C. B., 2004, p. 21). Importantly, these do not attract many immigrants. As Chan and Buckingham (2008, p. 596) suggest, smaller urban centres entail the relative lack of job opportunities and social welfare and amenities in comparison with major urban centres. Furthermore, despite the greater job opportunities in urban centres following the economic reforms, wages for agricultural hukou are far lower than their urban counterparts (Rush 2001, p. 36). Similarly, seeing as only those who have local hukou registration are allowed access to the majority of welfare services, including health care and education services, the quality of life for non-local urban immigrants is generally much worse (Rush 2001, p. 33). Essentially then, nongzhuangfei reform has had little impact on immigration trends; secondly, the enduring legacy of the hukou system is such that agricultural and nonagricultural distinctions are still pivotal factors in considering the future of internal migration. III. Recent Migration Trends in China and their Impact The Influx of Rural-Urban Migrants from the 1990s-Present Despite the enduring legacy of the hukou system, rural to urban migration in China has rapidly increased from the early 1980s to the present date. The economic and policy-related changes encouraged the number of migrant workers to grow from just 2 million in the early 1980s, to 30 million by 1989; this doubled to 60 million by 1993, and has since reached roughly 150 million (Batson, 2008). For reasons previously alluded to, a large percentage of these migrants are concentrated in major urban centres, particularly in south-eastern coastal provinces (see figure 1). Indeed, NBS data suggests that migrants from eastern provinces are about four times as likely to migrate within their home province as to migrate to another province (NBS as cited in Rush, September 2011). Importantly, the majority of rural immigrants maintain their original hukou

registration. In 2006, the predicted number of floating citizens rural people living outside of their local villages was estimated to be 132 million (Batson, 2008). All in all, these trends have led to a much larger concentration of the Chinese population in urban centres, and in turn the rapid urbanisation of Chinas spatial and demographic landscape (see figure 2). The Benefits of Rural to Urban Immigration The benefits of rural to urban immigration are largely reflected by the policy changes that have triggered the growing phenomenon. Chinas rapid economic expansion has been partly fuelled by the employment of rural migrant workers in, particularly private, enterprises. As one report suggests nearly 70 per cent of migrant workers are employed in private and individual firms (Rush 2011, p. 35); similarly, rural migrants are estimated to account for a little over half of urban employment in private and individual firms (Rush 2011, p. 35). The significance of this for Chinas sustained economic growth has already been witnessed. For instance, lay-offs instantiated by State Owned Enterprises (SOEs) led to a brief period of increased urban unemployment in the late 1990s this followed the recognition that SOEs were overstaffed as a result of the governments employment policy during the 20th century (Cai & Wang, 2007, p. 264). However, this has been offset by opportunities for private enterprises, provided by the rural immigrant labour force. For example, job growth in the private sector created 17 million jobs in the six years ending with 2001; this was in conjunction with an unexplained increase of 75 million jobs over the same period (Brooks & Tao 2010, p. 7). The latter may be attributed to unofficial small-businesses, such as street-vendors. More broadly, migration trends have led to an increased supply of cheap labour to private and collective industries, and have increased the demand for services in urban centres (Garcia 2004, p. 1).
Figure 1: The 30 Largest Inter-Provincial Migration Flows, 2000-2005

Note. Adapted from "China-Internal Migration" by Chan, K.W, 2011, Forthcoming in Immanuel Ness and Peter Bellwood (eds.) The Encyclopaedia of Global Migration, Blackwell Publishing

Figure 2: Chinas Rural and Urban Population Trends & Number of Chinese Cities with More than One Million People.

Note. Adapted from "On the Move" by A. Batson, 2008, Wall Street Journal

The Costs of Rural to Urban Immigration Whilst concerns with rural-urban migration in China are vast, underpinning them is the nature of urbanisation in China this encompasses the relationship between the state, rural-urban social and political divide and the increasing importance of private industry in China. In order to shed light on the intricacies of Chinas urbanisation process, the following will look at rural-urban migration and its impact on Guangdong province. Urbanisation and the Rural/Urban Divide in Guangdong: As can be seen in figure 1, Guangdong province has been the major destination for rural-urban migrant workers. In 2000, Guangdong recorded the greatest number of floating population per province, with 21.054 million; this also indicated a 26.7% share of the total floating population in China, and 24.7% of its own total population (Shu, 2006, pp. 34-35). As shown in table 1, Guangdongs total urban employment was the highest of all provinces in 2001. Importantly, this was despite its share in SOEs dropping -25.7% over an 11 year period ending in 2001. Guangdongs considerable share of floating population thus reflects its accommodation of private and collective enterprises, the greatest employer of rural immigrant workers (Rush 2011, p. 35). Guangdongs pervasive manufacturing industry specialising in products from televisions to air-conditioners - has required the steady flow of cheap labour provided by the floating population (Rush 2011, p. 35). This is particularly prevalent in the area surrounding and encompassing Shenzhen a Special Economic Zone (SEZ) designed purposively for attracting foreign capital in the form of either joint-venture arrangements or foreign-funded enterprises (Shu, 2006, p. 47). Guangzhou although still predominately influenced by the state-owned sector has a large share of secondary industry rural migrant workers, and provides a good example of urbanisation complexities in China. Guangzhous rural immigrant community consists of urban villages, themselves often intertwined with normal urban districts, though not officially subject to the Guangzhou local government. Despite the extent to which these communities are as stable and long-term as there are jobs to support them, they fail to make a large impact on local government planning. It is often noted that such communities and villages, have grown outside the urban planning system, ultimately meaning that many of them lack the infrastructure of paved streets and a (sic) sewage system (Hussain, 2003, p. 4). Nonetheless, these are the terms tacitly agreed to by rural immigrants who have no official permanent status in the place they inhabit. The establishment of these villages has

been facilitated by the requisitioning of local peasant farmland by the government; these peasants received compensation and the ownership of their houses, many of which have since been rented to rural immigrants (Gransow, 2010, p. 10). Importantly, these villages consist in three different geographic categories (China Labour Bulletin, 2006). First, there are those which are located on the boundaries of urban and rural areas. Second are those such as as Shipai which are integrated within the borders of the city but maintain a degree of farmland (Gransow, 2010, p. 12). The third and final type of rural immigrant village best highlights the overall anomaly. These are technically agricultural villages representing rural-urban migrant workers that are nonetheless fully integrated physically in to the urban landscape. In Guangzhou, these villages are so integrated that there is little room in-between buildings, both for vehicles and pedestrians.
Table 1: Urban Employment, by Province, 1990 and 2001
Total Urban Employment (Millions) 1990 2001 Change: 1990-2001 Guangdong 8.5 11.0* 2.5 61.9 36.2 Share in State-Owned Units (Percentage) 1990 2001 Change: 1990-2001 -25.7

*This represents the largest share of total urban employment per province in China.

Note. Adapted from "Chinas Labor Market Performance and Challenges" by Brooks, R & Tao, R, 2003, International Monetary Fund, p. 9

Rural-urban migrant communities, such as those in Guangzhou, have played a great role in the urbanisation of Guangdongs demographic and geographic landscape. Nonetheless, the legacy of the hukou system has created an anomaly: an agricultural/non-agricultural divide within a major urban centre. Basically, whilst the government no longer restricts the movement of agricultural hukou to the city, through the hukou system it is still able to establish who can and who cannot be a legitimate urban citizen (Garcia C. B., 2004, p. 20). For the floating population, this means high property prices in urban areas with little potential for upward mobility; it also implies a lack of social security coverage and inconvenient education arrangements for children (Garcia C. B., 2004, p. 11). For example, those migrants who become seriously ill often find it cheaper to return to their local village than to pay the fees necessary for urban medical coverage (Garcia C. B., 2004, p. 22). Similarly, children of migrant parents are not granted free or reduced-cost education in their nonlocal residence; in fact, fees for non-local workers are far greater than for locals (see table 2). Sometimes, this means they must return to their local village for education; often, it means they do not receive education and simply carry out an apprenticeship.

Table 2: Higher Costs of Education for Migrant Children

Note. Adapted from "Impacts of Internal Migration on Economic Growth and Urban Development in China" by Cai, F & Wang, D, 2007, Institute of Population and Labour Economics, p. 267

The reasons for this paradoxical arrangement of agricultural villages in urban centres, and the discernable class divide it creates, is embedded in the enduring legacy of the hukou system. More specifically, the provision of urban benefits since economic reform has been dwindling, to the extent that the state is no longer holding itself responsible for allocating public goods even to its native urban dwellers (Solinger 1999, as cited in Garcia 2004, p. 21). This has led to what were previously state provided benefits such as health care and education being privatised and even open to foreign investors (Garcia C. B., 2004, p. 21). The Chinese government wants to reform this system to increase the negative trend, such that benefits and retirement pensions are open to all urban workers (ibid). Nonetheless, such reforms fail to include temporary migrant workers; in fact, they rely on this exclusion as well as the profits gained from rural labour (ibid). These trends are reflected in the increasing wealth divide between agricultural and non-agricultural hukou citizens (The Economist, 2010). In terms of social integration accompanying rapid urbanisation in places like Guangzhou, this accentuates the agricultural/non-agricultural divide. This, in turn, prolongs the time it takes for migrants to integrate with the local population (Hussain, 2003, p. 16).

Broader Impacts of Rural-Urban Migration on Urban and Rural Societies

Beyond the impact on rural-urban migrants, this demographic phenomenon is destabilising both the pre-existing urban environments, and the rural environments that are being left behind. Guangzhou, for example, is already becoming increasingly over-populated (Leung, 2011). As in other major urban centres, this has led to increased pollution, stress on public infrastructure and corruption. It has been suggested that 70 per cent of criminal activity is undertaken by temporary rural migrants; one explanation would be that these people have no sense of duties and responsibility to take care of the urban surroundings, because they are not legal residents (APMRN, 2003). In turn, this has led to various protests by the urban-hukou population, only furthering the social divide (APMRN, 2003). As shown in figures 1 and 2, the overpopulation of urban centres goes hand-in-hand with rural-urban migration, as these are where employment opportunities lie. Thus, overcoming these problems will require either the expansion of public planning and spending to include temporary citizens, or the decentralisation of non-agricultural job opportunities for rural workers. The latter draws on another problem created by the current migration trends: the fate of rural areas and the agricultural industry as a consequence of Chinas economic restructuring (APMRN, 2003). In the 1980s, the Township/Village Enterprise (TVE) initiative was greatly successful in providing work for rural citizens in both agricultural and non-agricultural areas. For instance, the number of rural labourers transferred from farming to TVEs grew from 9.99 million in 1980, to 92.65 million in 1990 (APMRN, 2003). In the past two decades, however, the capacity for TVEs to absorb rural labour has peaked. The APMRN (2003) suggests that from 1990 to 1994, on average there were only 0.120.14 persons in each rural household working in the TVEs; meanwhile, roughly 2.87 part- or fulltime workers existed in each household. This is compounded by the fact that, whilst there is a rural labour surplus in agricultural areas, not all of this surplus labour can be transferred to nonagricultural areas. Instead it was often the young, educated mainly male rural labourers that left in the early 1990s, leaving the sustainable development of agriculture and social development in rural society problematic (APMRN, 2003). That the non-agricultural market has become increasingly flexible to more workers e.g. women in manufacturing compounds the problems for those remaining in agricultural employment and rural areas.

IV.

The Future of Internal Migration and Divided Urbanisation in China

Recent estimates indicate that the floating population is set to reach at least 350 million by 2050 at the current trajectory (China Daily, 2010). This reflects the current rate of urbanisation in China, which is set to surpass 50% of Chinas total population by 2020 (China Daily, 2010). As such, the problems already associated with this system are set to increase in the absence of significant reform. The influence of hukou on Chinas urbanisation process reflects a more fundamental economic redistribution policy; as such, overcoming these problems may require significant innovation on the governments behalf. Long term investment in the skills and education for rural citizens will increase productivity and competition, profiting urban centres and the upward mobility of rural-urban migrants (Cai & Wang, 2007, p. 269). At the same time, overpopulation in places like Guangzhou could be addressed by the decentralisation of private industry from urban to rural areas. This would further facilitate the education of rural children, making it more feasible for their parents to stay closer to their local village. A more short-term goal may consist in expanding the periphery of key urban centres, better facilitating rural immigrant workers and families. The following section will address these short and long-term solutions more adequately. Private vs. State Owned Enterprise and Rural-Urban Divide In places like Guangzhou, where the percentage of rural-urban temporary migrants is more pronounced, long-term changes to the hukou system may evolve naturally. The current system protects local urban workers through guaranteed jobs in SOEs whilst this is good for social stability, this market is not competitive, and salary levels do not reflect the demand for and supply of labour (Cai & Wang, 2007, p. 262). Conversely, the labour market which supplies the various non-stateowned enterprises and self-employed sectors is open; this means that wages ultimately reflect a supply and demand mechanism for labour (ibid). As such, the potential privatisation of SOEs is tantamount to increased competition and incentive, simultaneously increasing productivity and employment equality among rural and urban workers. As Garcia suggests:
The hukou system limits the growth and productivity potential of urban centres, leading to insufficient agglomeration of economic activity, not only in urban areas but also within the rural industrial sector.

Therefore, increased wages, living standards and greater upward mobility is possible for rural workers in a way which would also benefit the national economy. However, any sudden movement in this direction would likely unsettle urban workers, who have already expressed great concern over job competition following the SOE layoffs of the 1990s (Cai & Wang, 2007, p. 263). Bottom up vs. Expansive Urbanisation: Financial, Legal and Hukou-Related Dynamics More realistically, reform may occur as a result of the shifting dynamics of the urbanisation mechanism. Reports suggest that there is a growing shortage of labour supply for many of the increasingly dependent private enterprises (Knight et al 2010, as cited in Rush 2011, p. 37). This is despite a sustained labour surplus in agricultural areas and is due, in part, to the way in which the government continues to use the hukou system to regulate rural-urban migration. It has enacted this regulatory policy largely through limiting incentives. For example, the lack of a secondary housing market in key urban centres means that squatting in already overcrowded and overpriced urban areas is the only viable option; this is further compounded by the lack of social security benefits to

these immigrants (Jiang 2006, p. 723). Furthermore, the costs at attempting this immigration process are often too risky a result of the institutional barriers to migration (Cai & Wang, 2007, p. 267). For example, whilst migrants can mostly get permits to move to urban centres, these are not cheap. Although by law this is not supposed to be the case, the government increases the costs by levying the fee (ibid). As such, despite a substantial labour surplus in agricultural areas, it is not necessarily more viable for agricultural workers to take part in the urbanisation process. Clearly this system represents a problem for private industry - if it continues, it will necessitate an increase in wages for rural immigrant workers to make re-location viable. Furthermore, sustaining this demographic flow through open-market mechanisms is problematic under the current housing system for rural-urban migrants. In this light, Garcia (2006, p. 50) notes how urbanisation in China has been characterised by two parallel processes: rural or bottom up urbanisation, and the growth of existing cities. Whilst the latter is largely influenced by factors such as foreign direct investment (FDI), GDP growth and Coastal/Inland disparities, the former implies the concentration of labour surplus in agriculture, and how this has led to smaller rural towns and cities urbanising naturally (ibid). Given its relatively low starting point and greater capacity for change, Chinas most extensive form of urbanisation has occurred in this bottom-up notion (ibid). In the 1990s, this was largely facilitated through TVEs and other private industry initiatives however, the decline of these enterprises has reversed the trend. In part, this is due to the opportunities provided in the coastal regions, such as Guangdong, which remain the most practical location of FDI-related industry (Garcia 2006, p. 51). The shift in focus from bottom-up urbanisation to the expansion of medium and larger cities has been fuelled by this concentration of private particularly manufacturing industry in coastal regions. As agglomeration theories of economics suggests, focusing industry in medium to larger cities provides the greatest net benefit (Garcia B. C., 2006, p. 54). This is largely because they expand the tertiary sector exponentially, and generally can better accommodate resources and deliver better returns (ibid). Clearly however, the rationality in maintaining this policy of expansive urbanisation is untenable if much of the industrialisation process is fuelled by cheap, rural labour. This will remain the case until there is significant urban planning reform. This entails one of two possible options for resolving Chinas urbanisation dilemma. This first option draws on the dilemma faced by private industry: how to attract rural surplus labour to medium and larger cities, overcoming the lack of infrastructure for this population and restraints imposed by the hukou system. This could be achieved by expanding on the periphery of urban centres, thereby making immigration more viable and permanent (Jiang, 2006, p. 723). It would require further loosening and reform of the hukou system, but importantly would do so whilst softening the impact on current infrastructure and resources. The other solution is more adequate and takes in to account the disparities between inland and coastal regions, as well as the well-being of smaller rural towns and cities (Garcia B. C., 2006, p. 59). The bottom up approach accommodates the central governments aim to urbanise its rural population; however, in doing so it avoids concentrating this population in already large urban centres. This solution is premised on the idea that private industry can thrive beyond urban centres, because transportation and employment in trade seem to bear no relationship to urban scale (Garcia B. C., 2006, p. 59). Garcia suggests that it is importantfor small urban centres and their surrounding rural areas to take advantage of such economic activities, in order to create economies of scale that promote urban and economic growth. Besides the obvious advantage of reducing the

concentration of rural population in major urban centres, this will allow more rural workers to commute from their home village (ibid). This would have the two-fold effect of reducing accession costs to farmers, as well as reducing stress on these smaller urban centre (ibid). Furthermore, rural children would have more convenient access to education. In essence, smaller urban centres may serve as hubs for a greater geographical dispersion of Chinas urbanisation process. Whether or not they can create enough jobs to absorb the rural surplus labour, while creating a suitable environment to retain those workers on long-term basis remains to be seen (Garcia, 2006, p. 60). However, reforms that make this process more viable are the first step. These include reforms to the hukou system, and the overcoming of financial and legal barriers which hinder the mobility of capital and private industry (Garcia, 2006, p. 60). V. Conclusion

Rapid urbanisation in China has been fuelled in part by rural to urban migration. More importantly, this has characterised Chinas urbanisation as a type of dualism. That is, there is a tension between expansive urbanisation (of pre-existing medium and large centres), and bottom-up urbanisation (urbanisation of small, rural towns). Whilst the former may be viable in the future, the current hukou system complicates things. This has led to problems such as poor living conditions for rural migrants; the degradation and stress on urban infrastructure due to a lack of public planning; various economic inefficiencies due to tensions between private enterprise, central and local government and the rural/urban population. Though any resolution may be incremental, all of these problems can be addressed simultaneously through short and long term innovation and reform.

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