While the last thirty years has seen China’s urban population grow from one fifth to a half of the total, this figure masks the 15% who, though living in cities, lack urban residence permits. At The Wall Street Journal, Tom Orlik argues that this lack of hukou status has negative effects extending well beyond the migrants and their children themselves:
The crucial point is that rural residents can move to the city, but without an urban residence permit—known as an urban hukou—they are confined to the margins of city life. According to Professor Kam Wing Chan, an expert on China’s urbanization at the University of Washington, the share of China’s population that has urban residence rights is around 35%, substantially below the 50% of the population that live in the cities.
The 171 million migrant workers who fall into that hole have an average wage of around $3,600 a year, compared with an average of $5,700 for registered urban workers. That is more than they earned in the countryside. But although they might have built China’s glittering new residential compounds, living in dormitories in twilight zones on the edges of the city they are hardly likely to buy an apartment in one of them ….
China’s move toward a more urban society is real. But without reform to the hukou system to bring migrants into the mainstream of urban opportunity, a bigger city population won’t be the straightforward driver of consumption growth that many take as a given.