China’s household registration, or Hukou, is a holdover from 1950s that restricts the ability of citizens to access social services or buy property outside the area where they were born.
The rationale for introducing Hukou was to prevent everyone from moving to Shanghai, Beijing or other large cities. Although the restrictions have been loosened over the years, it seems sooner or later China has to loosen them up even more.
Since 2013, the year working age population (age 15 to 64) peaked in size, the ratio of urban job openings to workers has steadily risen to 1.4 up from 1.1 in 2012.
Source for the graph: WSJFurthermore, a new research shows that China could grow even further if it had allowed free movement of labor.
There are signs to support the arguments presented in this research: Hangzhou, home to Alibaba, has relaxed its Hukou requirements for college graduates since 2019 and has been more liberal in this regard compared to Shanghai.
Unsurprisingly, the city’s population has grown 17% in 2014-2019 period and its economy has been growing faster than Shanghai too. If conservative cities want to stay competitive, they should probably follow suit.
