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Friday, 17 August, 2001, 11:10 GMT 12:10 UK
Inside China: Workers on the move
Chinese labourers building a new park in Beijing
Chinese workers are legally restricted at the moment
By BBC News Online's Mary Hennock

Wang Hailong sells newspapers on the streets of the western Chinese city of Chongqing.

He is an illegal migrant worker who moved to the industrial city seven years ago to escape the poverty of the countryside and share in China's economic boom.

"The police do hassle us rather than the city newspaper sellers, making us move on from our pitches", says Mr Wang, who has held temporary jobs as on construction sites and in factories.

Mr Wang is one of a "floating population" of migrants, whom the Chinese authorities have estimated number at least 100 million.

Past planning

Now, as China gears up to enter the World Trade Organisation, the ruling communist party is to scrap the residence permit system which consigns migrants to illegality.

The system of permits, known as hukou, was devised in the late 1950s as China adopted communist central planning.

The permits assign every Chinese citizen to a home district, outside of which they have few rights to welfare benefits, medical care or schooling.

The Ministry of Public Security, which administers the hukou system, confirmed on 27 August that hukou will be scrapped within five years because it puts "excessive constraints" on labour mobility.

Free market

"The hukou system is not compatible with a market economy and free labour market," says one local Labour Bureau official who did not wish to be named.

" We should treat everyone the same, wherever they come from." China's government is gearing itself to cope with rising unemployment as inefficient state enterprises come under pressure from foreign competitors.

Imports from US firms are expected to double by the end of the decade to $44bn due to the lifting of trade restrictions, according to the office of the US Trade Representative.

About 8 million workers a year are likely to be laid off from state enterprises in the next five years, according to research by the Chinese Academy of Social Sciences.

New welfare system

Under these pressures, China's government is seeking ways to stabilise the labour market.

The State Development Planning Commission (SDPC) intends to replace hukou registration with a unified national social security system so workers can claim benefits wherever they live.

Scrapping the hukou system will bring the laws in line with daily reality and make it easier to administer.

"In recent years, mass rural migration and the government's increasingly positive attitude to labour mobility has led to the reform, relaxation and disregard of hukou regulations", one sociologist in China told BBC News Online.

Police look away

In Chongqing, the local government has dropped its policy of penalising enterprises which hire rural migrants and opened the city's employment agencies to those without city residence, she said.

Police harassment of migrants continues but is less severe than in the past.

Fines and deportations to the countryside have become rarer.

Zhang Xiaomei has been a domestic servant in Chongqing for six years.

"The police used to come and cause trouble and fine the landlady for having rural migrants," she says.

"But now it is easier to get a temporary residence card and they leave us alone".

As police harassment has lessened, it has become easier and cheaper to buy a black market hukou but many migrants do not see it as necessary.

Mr Wang says he recently bought a hukou for his son to ensure he can carry on studying in Chongqing.

"It only cost 10,000 yuan ($1,200) - but it is not worth it for my wife and me," Mr Wang says.

The average urban wage is around 1,000 yuan a month.

Private enterprise

As migrant workers have become more established in Chongqing, some are finding better jobs or running successful businesses.

Data shows that "70% of small businessmen in Chongqing, and 60% of workers undertaking retraining and evening classes, are rural migrants", the researcher told BBC News Online.

The SDPC expects about 46 million people will enter the urban labour force in the next five years.

The government is becoming more tolerant of private enterprise in the hope it can absorb some of these extra workers.

In a recent speech, President Jiang Zemin suggested private entrepreneurs should be able to join the Chinese Communist Party.

Prejudice

The southern cities of Shenzhen, bordering Hong Kong, and Zhuhai, near Macau, both grant residence permits to migrants who can afford to buy property.

But prejudice against migrants remains strong, particularly among urban residents who are bearing the brunt of state enterprise reform.

"I still hate the way city people look down on us," says domestic servant Ms Zhang.

"I used to think maybe I was not as good as them. But I see city women doing the same work as I do and it makes me realise we are just the same."

Migrants "are considered less civilised and held responsible for increasing crime and dirtiness" in a deteriorating urban environment, the researcher says.

But the scrapping of hukou as part of welfare and labour market reforms is unlikely to mean the end of all kinds of control, especially in the biggest cities and in politically-sensitive Beijing.

"Everyone knows there would be utter chaos if there were really no restrictions," said another sociologist with a Chinese think-tank quoted in the Economist magazine.

"And that will never be allowed to happen."

See also:

17 Aug 01 | Business
Inside China: Workers on the move
17 Jul 01 | Business
China's economy booms
05 Mar 01 | Business
China says WTO will hit growth
31 Jul 01 | Business
China lifts price controls
18 Apr 01 | Business
China beats growth forecasts
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