The Princeling and the Paupers

Three decades after Deng Xiaoping unleashed his market reforms, resentment over China’s internal immigration policy — particularly the hukou registration system — has finally boiled over. On March 1, 13 state-run newspapers, including the well-regarded Economic Observer, simultaneously carried a front-page editorial calling for the system to be abolished because of the "invisible fetters" it placed on all Chinese citizens. The government seemed wise to the growing resentment, with Premier Wen Jiabao promising to reform the system in an online chat days before the editorial came out and announcing some reforms today. But the unprecedented outcry from the press still caught many in Beijing off guard. So is the Fourth Estate beginning to flex its muscles in China?

Not really. It is hard to imagine that the papers brandished the editorial without advance official sanction. Although one editor might have had the courage to risk his career with the editorial, organizing so visible a joint protest would have brought severe punishment had it not received some wink of approval from on high. Indeed, it is more likely that the government recognized that it needed to fix the hukou system and decided to appease resentment over it in advance of the just convened National People’s Congress (NPC) — during which the Chinese Communist Party will try to stifle or hide all evidence of a house increasingly divided.

The hukou system, modeled on the Stalinist propiska (which also lingers on in today’s Russia), effectively controls internal immigration: The government decides how many people can move their registration from one, usually rural, district into another, usually urban, one. People who move to another part of the country without permission risk losing basic rights. They cannot officially live or work anywhere. Their children cannot get schooling; they cannot get medicine. (On a personal note, when I wanted to get married in China in 2006, I could not do so in a civil registration because, having lived abroad, I could not produce a hukou.) Unless illegal migrants can bribe a local official to transfer their papers, they become a refugee in their own country.

The lack of a hukou and its corresponding rights and privileges is why most migrant workers — the vast majority of whom are male — rarely bring their families with them when they move to a city seeking work. And, as it impacts China’s huge number of internal migrants (estimates place the number between 100 million and 150 million), it — alongside the relentless petty corruptions of Chinese society — is a major point of public anger.

The Chinese Communist Party (CCP) knows it, hence the promise of hukou reform. The timing of the affair also suggests official connivance. The articles appeared just days before the NPC’s annual meeting in Beijing. Organized displays of discontent around the time of the NPC are rarely tolerated. The NPC receives petitions from aggrieved citizens in the run-up to the meetings, and the number of petitions has been growing each year, from 100,000 in 2004 to well over 400,000 last year. This swelling unrest has prompted officials to order both strenuous efforts to keep petitioners from flocking to Beijing to present their petitions in person, and also to anticipate and try to dampen public resentments when possible.

Keeping the NPC docile is particularly important this year because the end of the Hu Jintao/Wen Jiabao era is in sight — and the transfer of power is not going as smoothly as party elders had hoped. President Hu and his heir apparent, Vice President Xi Jinping, due to take over in 2012, are on the opposite sides of China’s political spectrum when it comes to crucial domestic policy issues. Xi — a "princeling," as the descendants of communist China’s revolutionary founders are called — is a follower of the "Shanghai School" of development. He prioritizes China’s dynamic urban centers and market-based reforms. Hu, on the other hand, is increasingly keen to focus on rural development and state control.

The urban/rural, market/state divide within the CCP has prevented Beijing from making progress on subjecting the yuan to market forces, fragmented China’s stimulus package into industrial policies, and is forcing the Chinese people to keep high saving rates for covering health and retirement expenses. All of this is making the much-needed "rebalancing" of China’s economy toward more domestically based growth more difficult.

The friction became public last September when CCP leaders failed to make Xi deputy commander in chief of the armed forces. The suggestion is that Hu maneuvered to keep Xi off the powerful central military affairs commission because he intends to use continuing chairmanship of that body to maintain his influence after he leaves office (something Deng Xiaoping did during his years as the country’s paramount leader, when he nevertheless held no official party or state position). This political wrestling match probably goes some way toward explaining China’s current diplomatic bluster and the domestic crackdowns in Tibet and Xinjiang.  After all, with nationalist feelings on the rise, no Chinese leader wants to look soft and give his rivals an opportunity to attack him.

But the CCP leadership realizes that nationalism alone will not keep the population content. Only growth, and a systematic easing of the plight of the country’s most desperate people, can do that. Removing — or at least reforming — the hated hukou is part of this political effort. Plus, it has the added advantage of playing to both Hu’s and Xi’s constituencies by dampening the resentments of both urban migrants and countryside peasants, dreaming of a move to the city.

China’s politicians may not be democrats, but they know a win-win reform when they see it.