Beijing’s Hukou Reform Is Not Welfare-Oriented
Christopher Nye & Charles Sun
Executive Summary:
On May 22, the State Council of the People’s Republic of China (PRC) ordered local governments to provide basic public services by place of residence, not hukou (户口). The document reallocates fiscal burdens rather than expanding welfare.
Across social insurance, medical insurance, and education, the reform equalizes access but not benefits. The roughly 17:1 pension gap, the reimbursement rate gap, and the hukou ties to college entrance exam eligibility remain untouched.
The binding levers are fiscal, including central transfers and urban land quotas indexed to permanent residents. This reverses the prior regime, under which the cross-province pension transfer was capped at 12 percent of the wage base. No new spending is committed.
Under fiscal constraint, the most likely path to a more equal system is leveling urban privilege down and marketizing services, not lifting rural benefits up. Registration will not be abolished, and megacity hukou holders will resist even this limited reform.
On May 22, the State Council of the People’s Republic of China (PRC) released the “Opinion on Implementing the Provision of Basic Public Services at Place of Permanent Residence” (国务院关于推行常住地提供基本公共服务的实施意见), directing local governments to deliver education, public rental housing, social insurance, basic medical insurance, employment services, and a range of social assistance to the resident population without regard to hukou (户口) status (State Council, May 22). Hukou, the PRC’s household registration system, assigns every citizen at birth to a locality—typically inherited from their parents—and has historically tied access to public services to that registered place of origin, regardless of where they now live or work. The same day the reform was announced, official statistics showed the PRC’s floating population (流动人口) at just under 360 million as of November 1, 2025 (National Bureau of Statistics, May 22). With over 25 percent of all residents living outside their registered jurisdiction, the question of which government bears the fiscal claim for their public services could no longer be deferred.
International coverage has framed the document as Beijing removing the hukou barrier so migrant workers can finally reach urban social insurance and public services (South China Morning Post, May 22). That framing is not wrong, but it misses the point. The high threshold to registration in the megacities remains, even if residents can access a limited measure of urban services.
The document operationalizes a commitment made at the Third Plenum of the 20th Central Committee in 2024, in a fiscal environment in which any expansion of benefits is unaffordable (People’s Daily, July 22, 2024). It loosens access across a wide set of service domains, redirects central fiscal transfers toward permanent-resident populations, and conditions urban land quotas on actual residence. It does not touch the registration system itself, the urban–rural benefit gap, or the hard limits in pension formulas, medical reimbursement, and college entrance examinations. The reform is a recalibration of who pays into and draws from an existing fragmented system, executed with no new spending.
Hukou as an Instrument of Social Control
The PRC’s household registration system was built to control the population, not to serve it, and has been run by the public security bureaus (PSBs) from the start. In 1951, the Ministry of Public Security (MPS) promulgated the “Provisional Regulations on Urban Household Management” (城市户口管理暂行条例), first placing the administration of births, deaths, moves into and out of cities, and “social status changes” (社会变动) under the PSB. In 1955, the State Council extended registration from the cities to the entire country and required annual statistical reporting. The system took its enduring statutory form in 1958, when the Standing Committee of the National People’s Congress (NPC) passed the “Regulations on Household Registration of the PRC” (中华人民共和国户口登记条例). These classified the entire population as holding either “agricultural household registration” (农业户口) or “non-agricultural household registration” (非农业户口) and required official authorization before any move from countryside to city (MPS, December 16, 2021). They remain the foundational statutory basis of the system today and have never been repealed.
The system was unconstitutional from the start. The 1954 Constitution guaranteed that citizens enjoy “freedom of residence and freedom to change their residence” (居住和迁徙的自由), yet hukou plainly imposed an unreasonable restriction on that freedom (NPC, September 20, 1954). The contradiction was resolved not by conforming the system to the constitution but by amending the constitution to the system. Freedom of residence is a basic right recognized across jurisdictions and set out in the Universal Declaration of Human Rights, but the hukou system has effectively extinguished it for PRC citizens (United Nations, December 10, 1948). This is not a gap the current reform touches, and not one a reform at this level could touch.
The control function was most lethal during the Great Famine of 1959–1961. The 1958 regulations took effect on the eve of the famine. Combined with the forced labor (劳动改造) system, the custody-and-repatriation (收容遣送) of those who left without authorization, and a rationing regime tied to registration status, the system locked rural residents in place and prevented them from moving to cities or to neighboring provinces in search of food. The restrictions did not cause the famine, but they determined who died in it. Urban hukou holders drew state grain rations and largely survived. Rural hukou holders held no comparable ration entitlement; once compulsory procurement had stripped the countryside of grain, those left without food starved. The resulting deaths, numbering in the tens of millions, fell overwhelmingly on the rural population the system immobilized. [1]
The reform era loosened these restrictions without ever repealing the registration system. A 1984 State Council notice first permitted peasants to settle in market towns, and the 1985 introduction of resident identity cards, paired with temporary residence permits, created a parallel administrative track for the floating population. The 2003 Sun Zhigang (孙志刚) case led to the abolition of the custody-and-repatriation system; and in 2014, the State Council abolished the agricultural and non-agricultural distinction, and committed to a national residence permit system for registration (MPS, December 23, 2015; December 13, 2015). [2] A 2024 analysis of 332 cities found that the weighted-average urban settlement threshold for hukou had fallen from 98.8 percent in 1999 to 12.6 percent in 2024 (Zhang and Chen, 2024). [3] Only nine cities, the wealthiest metros led by Beijing, Shanghai, Guangzhou, and Shenzhen, still set thresholds above 50 percent; yet those same nine cities took in more than a third of all cross-province migrants in 2020. The problem that remains is concentrated in the megacities that keep their gates closed, and it is there that the recent reform operates.
Reform Continues to Open Urban Welfare Access
The reform is the implementing step in a sequence reaching back to the 2024 Third Plenum decision. This directed the system to “fully remove hukou restrictions on participating in social insurance at place of employment” (全面取消在就业地参保户籍限制) (Xinhua, July 21, 2024). The 2025 Central No. 1 Document repeated the directive, and the central government later issued an opinion that placed the removal of hukou restrictions on workplace social-insurance enrollment as the first item under expanding social insurance coverage (Xinhua, February 23, 2025; June 9, 2025). In mid-2025, the Central Financial and Economic Affairs Commission folded labor-mobility reform into the drive for a unified national market under the formula “Five Unifications, One Opening” (五统一、一开放) (Xinhua, July 1, 2025). In January 2026, the State Council called for institutions “adapted to public services following people” (公共服务随人走), the phrase that became the standard formulation in subsequent commentary (Xinhua, January 9). By the NDRC’s own account, about three-quarters of the 81 categories under the national basic public service standard had already been delivered on a place-of-residence basis (People’s Daily, May 24).
The new reform opens access by residence across a broad set of domains. It widens public rental housing to stably employed un-settled residents and extends the housing provident fund to flexible workers; it folds un-settled residents into local child care, elderly care, social assistance, and disability support; and it pilots residence-permit mutual recognition and accumulated-residence or points conversion in the Beijing-Tianjin-Hebei, Yangtze River Delta, and Greater Bay Area regions (State Council, May 22). In nearly every domain, the document moves access, not benefits, and leaves local discretion in place. The decisive cases are also the three domains where the benefit gap is largest and most measurable.
In social insurance, the document removes the hukou restriction on joining the employee schemes at one’s place of work. This enables migrants to enroll wherever they are employed, but two gaps remain (State Council, May 22). First, the urban employee pension (城镇职工基本养老保险) and the urban-rural resident pension (城乡居民基本养老保险) run on different contributions, formulas, and financing, creating a structural gap. The 2022 monthly per-capita pension was approximately renminbi (RMB) 205 ($31) for urban-rural residents and RMB 3,600 ($542) for urban employees, derived from total benefit outlays divided by recipient numbers in the Ministry of Human Resources and Social Security’s (MOHRSS) annual statistical communiqué—a 17:1 difference (MOHRSS, June 20, 2023). Within the urban-employee category, retirees from government and public institutions draw substantially more than enterprise retirees, widening the gap against the resident scheme further still. Second, there is a procedural gap. Under a 2009 social security directive, which remains in force, a cross-province worker draws the pension in the hukou province by default, and elsewhere only after ten years of contributions in a single other jurisdiction (State Council, December 28, 2009). Because pension standards differ sharply between the wealthy coastal cities and the inland provinces most migrants come from, this routinely means paying in at a high standard and drawing out at a low one. The reform admits migrants to the scheme, but it does nothing to address these two gaps.
Similar issues emerge with basic medical insurance. Cross-province care still follows a rule set in a 2022 National Healthcare Security Administration (NHSA) and Ministry of Finance notice known as “place-of-care directory, place-of-enrollment policy” (就医地目录、参保地政策): the reimbursable list follows the place of care, but the deductible, reimbursement ratio, and ceiling follow the enrollment jurisdiction (NHSA, July 26, 2022). This means that a migrant who falls ill in a major city but is enrolled in a poor home county is reimbursed at the county’s lower rate and against its lower ceiling. A deeper divide is between two separate systems. The employee medical scheme reimburses at substantially higher rates, carries higher ceilings and a lifetime personal account, and continues after retirement, while the urban-rural resident scheme runs on a flat annual premium that lapses if unpaid. Reaching the employee scheme requires an employer that enrolls its workers, and the migrants who most need it are often those without one: the ride-hailing drivers, delivery riders, and agency-dispatched laborers who staff much of the urban service economy are typically left to the resident scheme or to no coverage at all. Although the new opinion encourages employee enrollment, it does not compel employers to provide it.
In education, the document spans three layers and resolves none of the persistent structural barriers to access within the sector. For compulsory schooling, it tells receiving cities to enroll more migrant children in public schools and bars officials from demanding documents beyond a residence permit; but it does not touch the school district admission systems of the largest cities, where places go first to locally registered children and only afterward to non-hukou children. [4] For preschool and senior high school, the document only urges localities to “advance” (推动) inclusion. For the college entrance examination, it restates the 2012 principle that qualifying migrant children may sit the exam locally where the receiving jurisdiction allows, but examination papers, score lines, and admission quotas remain tied to the province of hukou registration, and targeted programs for rural and former-poverty-county candidates require continuous county-level hukou and schooling (Ministry of Education, March 19, 2012; State Council, August 30, 2012). In Beijing, most non-hukou children can still sit only the vocational-college exam, not the regular gaokao (China Brief, December 6, 2024).
In every domain, the reform opens the door to enrollment but not to the benefit that the system should provide. As a result, a migrant may join the urban schemes, take a seat in a local school, or apply for public housing, but pensions, medical reimbursements, and university admissions criteria are still set by the place of registration. The cost of integration is pushed onto employers and cross-jurisdictional mechanisms rather than met by new central spending, and the gate to the megacities stays shut.
Reform Driven by Fiscal Necessity
The country’s fiscal constraints limit the scope of the reform. The policy’s purpose is to relieve the pressure on the system exerted by an un-settled population without dismantling the barriers that keep that population out of the PRC’s major urban centers. The registration system administered under the 1958 regulations, including the PSB’s role in authorizing changes of permanent residence, remains in operation, and the current constitution still guarantees no freedom of residence.
The directive creates a reallocation mechanism, instructing the central government to allocate transfer payments by reference to the permanent-resident population and to tie new urban construction land quotas to growth in permanent residents, with priority for schools, hospitals, and affordable housing in inflow jurisdictions (State Council, May 22). Both provisions invert the prior decade’s logic. Under the cross-province pension transfer regime set in 2009, when a worker moved between provinces, the individual account transferred in full but the pooling-account transfer was capped at 12 percent of the worker’s contribution wage base. This was well below the actual employer contribution rates of 14–20 percent prevailing across provinces, with the balance staying with the origin jurisdiction (State Council, December 28, 2009). That design preserved fiscal liquidity in sending jurisdictions at the expense of receiving ones. The new document reverses it, compensating receiving cities for the load of taking on permanent residents. The reallocation runs between jurisdictions, not between social groups. Commentators have summarized it as “money follows people, land follows people” (钱随人走、地随人走). This is an accurate description, but it understates the implication that under hard fiscal constraints, the only way to make money follow people is to take it from somewhere else (Daily Economic News, May 25).
The resulting system is a stark contrast with other policy proposals following the Third Plenum in 2024. At the time, former State Council Development Research Center deputy director Liu Shijin (刘世锦) proposed a stimulus package of at least RMB 10 trillion ($1.4 trillion), roughly 7 percent of annual GDP, centered on basic public services, with raising service levels for migrant workers as one of two main breakthroughs (Sina Finance, September 21, 2024). The May 22 document offers nothing comparable, instead reallocating within the existing fiscal envelope.
Interpretations of the reform that emphasize decreasing discrimination miss the fact that access to benefits in principle does not equate to receiving benefits in practice, and those that view it as a careful balancing act between the interests of migrants and locals ignore the wider relationship between sending and receiving jurisdictions, which ensures that inequalities are maintained. [5]
Conclusion
The latest reform to the hukou system fits a three-decade pattern of loosening access to welfare that is conditioned on registration but while leaving the registration system alone. Its purpose is not to admit migrants to the cities that exclude them, but to give that excluded population a measure of urban services while keeping the gates to the country’s megacities shut. It achieves this by re-indexing transfer payments and land quotas from hukou to permanent residence. Under hard fiscal constraints, a 17:1 pension gap multiplied across the nearly 360 million people who reside outside their registration jurisdiction is one that cannot be closed. The more likely path is a downward leveling of urban privilege and the partial marketization of services, not an upward extension of urban benefits.
The registration system, which has always been a foundational instrument of state control and resource allocation rather than a welfare distribution system, is not on a path toward abolition. The prospects for the implementation of the new reform are also mixed, especially in megacities, where it faces resistance from incumbent registrants. Ultimately, without the political will to dramatically increase spending to support those at the bottom of PRC society, the system’s inequalities will persist, irrespective of how many tweaks the government makes at the margins.
This article originally appeared in China Brief. Check it out here!
Christopher Nye is a Non-Resident Fellow at The Jamestown Foundation.
Charles Sun is a China-focused policy analyst specializing in technology governance and the political economy of elite-state relations. He is a Yale Sinovation Fellow at the Yale School of Management and was a visiting fellow at the Shorenstein Asia-Pacific Research Center (APARC), Stanford University. His Stanford research introduced the Proactive Elite Alignment Theory (PEAT) framework for analyzing anticipatory compliance in China’s tech sector. He holds master’s degrees from Stanford University and Columbia University.
Notes
[1] For the hukou system’s role in restricting rural-to-urban mobility, see Tiejun Cheng and Mark Selden, “The Origins and Social Consequences of China’s Hukou System,” The China Quarterly 139 (September 1994): 644–668; on the scale of the famine’s mortality, see Frank Dikötter, Mao’s Great Famine (Bloomsbury, 2010); Yang Jisheng, Tombstone: The Great Chinese Famine, 1958-1962 (Farrar, Straus and Giroux, 2013).
[2] Sun Zhigang, a 27-year-old university graduate working in Guangzhou, was detained in 2003 for failing to produce a temporary residence permit and was beaten to death while held under the custody-and-repatriation system. The resulting public outcry led the State Council to abolish the system that year. See Keith J. Hand, “Using Law for a Righteous Purpose: The Sun Zhigang Incident and Evolving Forms of Citizen Action in the People’s Republic of China,” Columbia Journal of Transnational Law 45, no. 1 (2006): 114–197.
[3] Zhang Jipeng [张吉鹏] and Chen Zhu [陈 翥], “A Quantitative Analysis of Hukou System Reform and Urban Settlement Thresholds: 1996–2024 [户籍制度改革与城市落户门槛的量化分析: 1996—2024],” China Economic Quarterly [经 济 学 (季 刊 )] 24, no. 6 (2024): 1781–1797. http://web.archive.org/web/20251110110421/https://nsd.pku.edu.cn/docs/20251110164846322684.pdf.
[4] Admission ordering is set at the district level. Shanghai districts rank applicants by category, placing children whose registration and home address match (“人户一致”) ahead of others and assigning non-hukou children to whatever seats remain through “coordinated placement” (统筹). See Shanghai Municipal Education Commission, “Implementation Opinion on the 2025 Compulsory Education School Enrollment Work in Shanghai” (沪教委基〔2025〕11号), March 27, 2025. Beijing requires non-hukou families to clear a four-document screening—employment, housing, household register, and Beijing residence permit—and admits their children only after local registrants. See Beijing Municipal Education Commission, “Opinion on 2025 Compulsory Education Stage Enrollment Work” (京教基二〔2025〕3号), April 18, 2025.
[5] A Chinese Academy of Social Sciences (CASS) analysis published abroad framed earlier moves as removing “hukou-based discrimination” and making social insurance more portable (Friedrich-Ebert-Stiftung, February 5); and a scholar from Peking University called the reform a “balancing act” (平衡术) between migrants and incumbent local hukouholders (The Paper, May 23).