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Understanding China’s Internal Migration

“At the beginning of the new century, the Chinese government realized that measures aimed at inhibiting the movement of workers from rural to urban areas had generated many negative impacts on the development of the rural economy.” – Li Shi, Beijing Normal University

In November 2012, China began a once-in-a-decade leadership transition that will continue through this month when Xi Jinping succeeds Hu Jintao as President of the People’s Republic. Xi has been primed to carry his nation into the second decade of the twenty-first century, as the country prepares itself for an unprecedented international role. With its new economic, political, and military clout, Xi’s China stands ready to be both a regional and global leader. Amidst this historic shift, however, lies a set of deep challenges that Xi will be forced to confront on the international front.

These include a ‘pivoting’ United States, growing nationalism in Japan, and a more caustic North Korea, among many others. However, an often overlooked and more dangerous domestic problem is a result of the restrictions placed on the migrant workers that have been fueling China’s monumental growth. Understanding the causal factors that explain rural migrants’ flock to urban areas will be crucial for the fifth generation of leadership, which is dealing with one of the largest human movements in the world.

Historical Trends

Since the declaration of the People’s Republic of China in 1949, trends in internal migration have shifted between four distinct phases. The first phase, from 1951-1960, coincided with the First Five Year Plan (1953-1957) and the Great Leap Forward (1958). Following the lead of Stalin and the Soviet Union in the 1930s, Mao Zedong chose to invest in heavy industry following his ascension and solidification of power. Peasants rushed to the urban centers to fill the labor gap as a result of China’s booming industries and relatively laissez-faire migration policy during this time. Consequently, 20 percent of China’s population lived in cities by 1960.

The second phase, from 1961-1965, was the result of realization that China’s agriculture sector could not survive with the previous era’s rate of urbanization. With an urban population numbering 130 million by 1960, grain rations were issued in all major cities. Finally, to reduce the urban population, 24 million workers were forcibly sent to the countryside.

China’s destructive Culture Revolution, from 1966-1977, encompasses the third phase of migration policy within the PRC. As part of the “rustication movement” – amounting to a backlash against the country’s growing bourgeoisie culture following the Great Leap Forward – millions of party cadres, intellectuals, and young people were sent to the countryside and all rural to urban migration flows were halted. The urban population remained stagnant at around 17 percent during this time.

The fourth and final period, from 1978 to the present, has been a time of globally unprecedented rural to urban migration and urbanization. Deng Xiaoping’s reforms resulted in a relaxing of the harsh policies towards migrants, as well as an end to Mao’s Cultural Revolution. Deng abolished the use of grain rationing coupons and pursued free-market policies. This transition towards a market economy transformed the urban industrial structure and created further employment opportunities. And now, while migration is still restricted through the use of the six-decade-long hukou system, a requirement that rural citizens must register with their local governments and be forever classified by where they were born, rather than where they live, rural migrants can now live and work in cities so long as they are capable of supporting themselves. The result has been a massive influx into China’s booming cities, with nearly 44 percent of Chinese citizens now living in urban areas.

Catalysts for Internal Migration

While the state’s economy has experienced considerable growth, the dynamics of supply and demand stimulating this growth are driving urbanization patterns as well. Neoclassical migration theory speculates that nations (or, in the case of internal migration, regions) with scarce supply and high demand for cheap labor will pull immigrants in from nations or regions with a surplus of labor. In the case of China, increased demand for labor in the urban areas is caused primarily by two factors: growing investment in the manufacturing sector within the developed regions, such as Beijing, Shanghai, and Guangzhou, and an aging population and lower fertility rates in these cities.

China’s economic growth has primarily occurred in the eastern, coastal regions. Following Deng Xiaoping’s “Opening Up” strategy in 1978, preference was given to coastal cities and provinces, which were designated as special economic zones (SEZs). During the first reform period, from 1978 to 1984, Hainan province, together with the coastal cities of Xiamen, Shantou, Shenzhen, and Zhuhai were designated as SEZs. With the so-called pro-east policies, which included lower taxes and favorable land use initiatives, the eastern SEZs absorbed the largest share of foreign direct investment (FDI): 90.7 percent of total FDI was registered in these regions between 1983 and 1989, and 88.1 percent between 1990 and 1996. Today, 18 cities and one province – Hainan – are designated as SEZs, giving these areas greater leverage to entice foreign investors.

Foreign and domestic firms alike move their operations to the Chinese mainland for the prospect of cheaper labor in relative to their home country. This is evident in the comparative cases of Hong Kong and Guangdong province, following the reintegration of the developed island into the authority of the centralized PRC state. Compared to western labor standards and regulation, Hong Kong provided a comparative advantage in many sectors, allowing the tiny island to grow its economy at a rapid pace. After 1997, however, firms in Hong Kong were quick to relocate their businesses north into the developing Guangdong province for the purpose of using the abundance of cheap labor from the mainland. The central government has recognized the benefits of less regulation in these provinces, as cheap migrant labor provided the impetus for China’s economic growth.

The second explanation for increased demand relates to China’s aging population. Fertility rates among Chinese women have fallen to 1.8 children per woman in the first decade of the twenty-first century. As a result, the country’s population is aging at a relatively fast pace, with nearly 13 percent of the population over the age of 60 in 2011, up from 10.4 percent a decade ago. The growth of the working age population (ages 15 to 64) will decline from 0.95 percent per annum in the first decade of this century, to 0.19 percent per year from 2010 to 2020, and to -0.23 percent annually from 2020 to 2030. Simply put, growing labor shortages will provide an incentive for increased urban migration, as more workers will be required to match China’s continued growth.

Growing Discontent and the Need for Reform

Despite the incentives, migrant workers in China’s cities are often relegated to second class status. In order to simultaneously meet the demands for inexpensive labor and provide legal rights to lower-income workers, Xi Jinping and the new leadership of the People’s Republic must reform the migration policies that were instituted under Chairman Mao six decades ago.

The aforementioned hukou system is not only leading to continued income disparity between rural and urban population centers, but also to the mistreatment and subsequent discontent of rural-to-urban migrants. It operates similarly to an internal passport arrangement. Legal residence in a city – denied to migrant workers – entitles one access to permanent jobs, regular housing, public schooling, and public healthcare. Despite the fact that the Chinese Communist Party had previously mobilized peasant support for its cause during the civil war with the nationalist Kuomintang government, the communist ideal and the need to industrialize were seen as incompatible with the prior existing small farmer society.

Through the establishment of People’s Communes, the government repossessed the private land of farmers and accomplished the forceful transition to collective ownership. As such, the central government has succeeded in establishing a locally-controlled caste system, whereby preferential treatment is given to permanent and native citizens of the first-tier cities.

Prior to the 2010 meeting of the National People’s Congress, 11 national newspapers defied party restrictions and ranks by calling for the abolishment of the hukou system. “We hope that a bad policy we have suffered for decades will end with our generation, and allow the next generation to truly enjoy the sacred rights of freedom, democracy, and equality bestowed by the constitution.” The article argued that the system’s “invisible and heavy shackles” were causing undue suffering for those seeking a better life by moving to one of China’s vibrant cities.

As momentous as that defiance was, very little reform was accomplished by that National People’s Congress under the leadership of President Hu Jintao. However, the incentive for change is coming from the people most affected by rapid urbanization, rather than the top-down approach that has become so characteristic of reform within China. A nationwide initiative that seeks to establish property rights and make it easier to obtain urban citizenship for migrants has been underway in smaller cities. By establishing property rights and residency, the migrant workers of these industrial centers will theoretically be able to move out of the shadows and become productive citizens, rather than a strain on the urban society. Perhaps more importantly, when applied to rural areas, reform of the hukou system will have the added benefit of establishing firm property rights among China’s rural population, thereby giving greater financial incentive to avoid hasty migrations to first-tier cities.

The greatest threat to the future viability of the PRC will come from a restive population. A civilization that has existed for nearly 5,000 years will simply not accept that a restrictive ruling class which does nothing to better the rural and urban income disparity still carries the proverbial ‘Mandate of Heaven.’ In order to find this stability, Xi Jinping and the fifth generation will be forced to take on the delicate issue of internal migration.