RESIDENCE PERMIT REFORM: "OLD WINE IN NEW BOTTLE"

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 002459

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/13/2032
TAGS: PGOV PHUM SOCI CH
SUBJECT: RESIDENCE PERMIT REFORM: "OLD WINE IN NEW BOTTLE"
VEXES CHINA'S MIGRANTS

REF: 05 BEIJING 20606

Classified By: Political Section Internal Unit Chief Susan A. Thornton.
Reasons 1.4 (b/d).

Summary
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1. (C) An official announcement that residence
permits in 12 provinces and regions will no longer
classify citizens as rural or non-rural has pushed
debate over China's household registration system back
to the fore in media and academic circles. But as
with previous declarations of reform, the measures
amount to little more than a public relations exercise
meant to trumpet Government responsiveness to the
needs of disadvantaged citizens, our contacts said.
Eliminating the distinction between rural and non-
rural residence status does not make it any easier for
migrants to obtain resident status in the places where
they work, where they remain frozen out of basic
social benefits. Any genuine elimination of this
formal rural/urban divide would potentially have huge
consequences for localities, who under the current
system are responsible for providing social services
for urban dwellers. In an indication of the
hollowness of this latest pronouncement, even China's
official press is heaping scorn on the initiative.
Our contacts, taking a similar view, said financial
and social strains will prevent any real reform in the
near term. In the meantime, the gap between urban and
rural -- and migrant and urban white-collar workers --
remains as wide as ever. End Summary.

Rural vs. Urban
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2. (C) The Ministry of Public Security trumpeted the
elimination of the rural/urban designation on
residence permits in Hebei, Liaoning, Jiangsu,
Zhejiang, Fujian, Shandong, Hubei, Hunan, Guangxi,
Chongqing, Sichuan and Shaanxi in a March 30 press
announcement. The Central Government established the
household registration system, including the
rural/urban distinction, in 1958 after the disastrous
famines brought on by the Great Leap Forward and
forced collectivization. Originally, individuals with
urban permits were entitled to food allotments, while
rural residents were responsible for food production
with no assurance of allocations for themselves. This
aspect of the differentiation in status has
disappeared with the marketization of China's economy.


3. (C) But the distinction has retained importance in
terms of land rights, housing and social services, our
contacts said. A rural resident can use land for
farming or building. An urban resident can obtain an
apartment in the city more easily but has no right to
use or develop land. Moreover, China's social safety
net system mirrors the rural/urban distinction.
Though still underdeveloped, the urban pension, health
care and unemployment insurance systems offer far
better benefits than the scant personal pension and
health insurance plans in rural areas.

Even Official Media Critical
--------------


4. (C) In assessing the latest announcement of
"reform," Embassy contacts maintained that the changes
have done nothing to make it easier for migrants to
register in the districts where they work. China's
press has seized on this angle of the story, with most
articles taking a negative slant and complaining that
the measures are inadequate to ease the burdens on
migrants. The official Xinhuanet online newssite ran
a feature on April 2 under the headlie "Old Wine, New
Bottle," in which the reporters quoted migrants
grousing that the measure does nothing to address
their needs. "I still have no social security and no
medical care," one migrant in Ningxia complained in
the piece. Sohu.com published a similar story on
April 5 and the high-circulation magazine China
Newsweek's lead opinion piece on April 9 also
discussed the subject. It concluded that such stop-
gap measures or creating a "green card"-style guest
worker system that would allow cities to cherry pick
the laborers they say they need "can only harm
people's confidence in the government."

A Budget Buster

BEIJING 00002459 002 OF 002


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5. (C) The elimination of the rural/urban distinction
has "not been well thought out," said Zhang Zhanxin, a
scholar at the Chinese Academy for Social Sciences who
focuses on migration issues. He dismissed the reforms
as little more than public relations -- that is, the
Central Government wants to give the impression that
it is doing something to address the stark development
divide between China's urban and rural areas. Zhang
judged that real reform will be slow in coming largely
because municipal governments are keen to avoid fiscal
responsibility for the newcomers. According to
Chinese law, a given administrative district is
responsible for providing services, including paying
social benefits, to citizens registered there.


6. (C) In this vein, if the millions of migrants
currently in Beijing suddenly became legal residents,
it would be a budget buster for the city government,
Zhang said. Li Qiang (protect),Dean of the Sociology
Department at Tsinghua University, said that by his
school's research estimates, Beijing's population is
currently 16 million, of whom roughly 4 million are
migrants. The level of an individual's social
security, including pension and unemployment payouts,
remains tied to the location of legal residence. In
connection with this, it behooves local governments to
keep people divided according to residence permit
location "so they know who they are responsible for
and who they are not responsible for," Zhang observed.
Under this system, migrants are basically second-class
citizens. Paying extra administrative fees (or
bribes) can ease the way in terms of school enrollment
for migrant children or health care, but most
migrants' salaries are a fraction of that of their
urban resident counterparts.

Discrimination Against Migrants
--------------


7. (C) As a result, the announcement was a
disappointment to most in the mobile workforce, said
Wei Wei, founder of the Little Bird NGO, which
advocates on behalf of migrants. "The new rules do
nothing to address the discriminatory situation most
migrants face," he complained. Education is a prime
example. A recent People's University survey
indicated that as many as 40 percent of migrant
workers in Beijing bring spouses and children with
them. Wei Wei said primary and high schools regularly
apply steep administrative fees for enrollment of
pupils without valid residence permits for the
district. In addition, when it comes time to take the
national college entry exam, migrant students are at a
major disadvantage. The grade threshold for
university admittance for residents of showcase cities
such as Beijing and Shanghai is lower than for
students whose household registrations are in the
provinces, so migrant test takers must score higher
than their urban classmates. This is precisely the
kind of unequal policy that builds resentment among
migrant workers, Wei Wei said.


8. (C) The 12 provinces that, according to the MPS
announcement, are moving ahead with the elimination of
the rural/urban distinction are generally among the
more affluent and want to encourage urbanization, said
Ma Rong, a professor at Beijing University who
researches demographics. They want to ease the path
for people to move where the employment opportunities
are, even if eliminating the rural/urban distinction
is only a partial fix. In this vein, while Ma shared
the view of Zhang of CASS and others that the new
measures constitute just a small step, he highlighted
one bright spot. At a time when gaps between urban
and rural, coast and interior and rich and poor are as
pronounced as ever, anything that eliminates divisions
in society is a positive, even if it is only on paper.
RANDT