Is "Hukou" still a thing in China now?

Fact vs. Fiction: The Reality of China’s Hukou System in 2026

Baiguan’s note: This guest piece about China’s Hukou system is written by friend of the channel David Fishman, an expert in the energy sector, as well as development issues in China. He writes at X and in the newsletter Crossing the River by Feeling the Stones, both of which we highly recommend.

---

Fact vs. Fiction: The Reality of China’s Hukou System in 2026

By David Fishman

Back in May 2026, China’s State Council issued a new set of guidelines dealing with how basic public services are provided to Chinese citizens. Observers immediately noted a key shift: access to basic public services like education or healthcare was now phrased as based on “where people actually live”, instead of the location of their hukou. It is rare to see a Chinese policy choice that is well received both domestically and abroad, but this was one of those moments.

My social media was quickly flooded with comments supporting the policy change and explaining why it was now such a big deal to disconnect public services from the hukou location. Strictly speaking, they were not wrong: it would have been a big deal if this had actually been new. But it wasn’t. In reality, the State Council document was mostly just formally codifying a policy reality that had already existed on the provincial or municipal levels for several years. While this was already known by people who follow this area closely, the excitement from those who thought was a brand-new development helped to reveal who hadn’t been paying very close attention to the last decade of hukou reforms.

Modern Hukou History

In its earliest form, the hukou registration system was an intrinsic feature of labor allocation in China’s planned economy. Up until the 1980s, the Chinese state assigned urban jobs based on hukou location, and a position in an official work unit was only available to registered citizens of that location. Starting in the 90s, hukou registration no longer had a direct connection to employment location. This coincided with the economic transformation that saw hundreds of millions of inland workers migrate to the rapidly industrializing coastal regions. When they arrived, however, they still faced barriers to true integration with those urban economies. The key barrier was their hukou, because their public benefits as Chinese citizens (like healthcare or children’s education) were bound to their registration location, back in their hometowns.

The narrative employed by urban officials at the time was that this was necessary to prevent a surge of domestic migration from overwhelming limited municipal resources. This thought process is straightforward, and not even particularly unique to China. Many countries employ some version of this logic at local levels, where cities prioritize the provision of public resources to their own (taxpaying) citizens. China’s implementation was especially rigid, however, and when there are large gaps in quality between the public services in different regions, such measures can serve as a barrier to social mobility. When it comes to education, for instance, requiring children from less-developed regions to attend the weaker schools in those regions damages their prospects to attend stronger colleges and have better subsequent careers. Also, migrant parents were often forced to leave their children behind in their hometown for schooling while working in more developed regions, driving the well-known “left-behind children” phenomenon prevalent in the 2000s.

It should come as no surprise that this policy was a magnet for criticism. An arrangement that was, at least in theory, focused on the management and distribution of scarce public resources was clearly also a driver of social inequality. In the minds of its critics, both domestic and abroad, this became the defining characteristic of the hukou system.

Converting Rural to Urban Hukou

An additional wrinkle to the hukou issue is that there were originally two kinds of hukou: urban and rural (this is no longer the case today). Previously, converting a rural hukou to an urban hukou was administratively difficult, but many pursued it anyway. Beyond the obvious function of designating the citizen as a resident of an urban or rural administrative unit, their most notable distinction was that rural hukou holders were exclusively eligible to enjoy land usage rights in their village land collective. This included a share of the dividends if such land was expropriated to make way for a national project like a highway. A hukou in an urban unit enjoyed no such land-related privileges but qualified the citizen to participate in urban social programs, like the urban worker pension plan (which is more generous than the equivalent rural plan) and urban public services (which were generally of higher quality than equivalents in rural areas).

In the late 90s, the Chinese government began relaxing the policies around converting hukou from rural to urban areas, with pilots in small urban towns. By 2001, this program was formalised, substantially lowering administrative barriers to transfer a rural village hukou to an urban town hukou. Proof of employment and residence was still required, and implementation was always subject to local discretion with weak/no national enforcement, but reform was underway. However, it was still difficult for a rural hukou holder to convert to an urban hukou in a large city, typically requiring meeting high thresholds, including formal employment, educational qualifications, or property ownership.

Around this time, there were also some early moves to allow migrant workers to access public services based on where they worked, rather than being strictly tied to their hukou location. These initiatives were largely implemented at municipal levels and varied widely, but they took place against a broader central-government push for gradual hukou reform.

In 2001, the topic of hukou reform also caught the attention of the then-governor of Fujian province completing a doctorate at Tsinghua University, a promising young cadre named Xi Jinping. In his dissertation, titled “A Tentative Study on China’s Rural Marketization”, Xi urged an acceleration to hukou reform, noting that the system had “created a large income gap between rural and urban residents that should be corrected in a prudent and proactive manner” with “reform…to level out social services”.¹

But at that time, Mr. Xi would not be advancing to the national spotlight for at least another decade, and the kind of reforms he was describing were still far away too. For the most part, Chinese citizens consumed public services at the location of their hukou registration, and migrant workers were broadly excluded from using the public services in the coastal cities they were helping build, a situation that persisted through the 2000s and into the 2010s.

The Dawn of the Modern Reform Era

In 2014, State Council Document No. 25 (2014), Opinions of the State Council on Further Advancing the Reform of the Household Registration System launched a new phase of hukou reform. First, the urban-rural binary designation for hukou type was formally abolished in favor of a unified system for all registration purposes.² In addition to doing away with the urban/rural designation, Document No. 25 declared small urban areas “fully open” to hukou transfer, introduced a policy of gradual relaxation for hukou transfer in medium-sized cities, and formalized rule-based eligibility criteria for large cities and megacities, where hukou conversion would be based on conditions such as stable employment, housing, and social insurance contributions.

It also began the crucial task of decoupling the provision of public services from hukou location, tying access to public services to place of residence rather than hukou status. The resident permit (居住证) became the key delivery mechanism, which was solidified with State Council Executive Order 663 in 2015. For many cities, if citizens could demonstrate a certain period of continuous residence and contributions to the local social insurance system, they could get a resident permit and access basic services locally. This replaced the old local/non-local binary with a system of threshold-based inclusion.

Hukou Transfer Relaxation

This relaxation of hukou transfer policies arrived roughly around the same time (2010-2015) as the wave of Chinese modernization and development finally began extending to cities in inland regions that had previously been mocked as undesirable backwaters. I do not think this timing was a coincidence. Opening the figurative floodgates to domestic cross-migration runs less of a risk of straining limited urban resources across a small handful of megacities if broad growth has succeeded in creating new, attractive destinations elsewhere across the country. Shanghai faces less pressure from Anhui migration if cities like Hefei or Wuhu already offer viable, lower-cost urban alternatives.³

Following the State Council’s 2014 Opinions document, the old barriers to hukou conversion started coming down through the rest of the decade. Many small and medium-sized cities immediately opened up unrestricted conversion to a local hukou, while larger cities established transparent entry rules or points-based systems for conversion eligibility. By the end of 2014, every city in Sichuan and Guizhou except for their capitals (Chengdu and Guiyang, respectively) had already effectively opened local hukou conversion. Over the subsequent years, many more cities quietly removed remaining requirements, such as social insurance thresholds or residence duration. By the late 2010s, conversion in much of the country’s smaller cities was already largely a procedural affair. The first large city of note to announce an explicitly “zero-threshold” （零门槛）approach was probably Shijiazhuang (capital of Hebei) circa 2019, which made it the earliest provincial capital to remove all meaningful barriers. Other provincial capitals, including Nanchang, Kunming, Jinan, and Fuzhou, followed rapidly in the 2019–2021 timeframe.

By the end of 2024, a study based on data from 332 cities found that the average “hukou conversion threshold” across the country had fallen to just 12.6%, implying that roughly 85-90% of migrant workers qualified for conversion to a local hukou according to the requirements of their host city. The same study showed that over than 90% of the cities surveyed were now classified as “low barrier” or “no barrier” cities, with just nine cities nationwide still maintaining relatively high thresholds. The nine “high barrier” cities saw hukou thresholds >50%, with four of them having very high thresholds of >85%.⁴

Despite these reduced barriers, there remains a substantial gap between the share of the Chinese population living in an urban location (i.e., the urbanization rate) which in 2024 was ~67% in according to the National Bureau of Statistics, and the share of the population with a hukou registration in an urban location, which was just ~50% according to the Ministry of Public Security. This gap amounts to 17% of the population, or nearly 240 million people. Part of the gap can be explained by migrant workers in those 9 cities that still don’t qualify, or who live in other cities but don’t yet meet the requirements, but they can’t account for all of it.⁵ So why are there seemingly so many Chinese citizens choosing to work in an urban location for which they appear to qualify for hukou conversion, but not pursuing it?

Cross-Provincial Education and Healthcare Access

Part of the answer to that question can be found in the policy changes to how public services are accessed in China. In addition to hukou conversion, the last decade has seen major reforms to how citizens access public services like schooling and healthcare. In 2016, State Council Document No. 40 began requiring migrant children’s compulsory education be handled primarily by destination governments, financed through local planning and budgets, and operationalised through residence permits rather than hukou conversion. By 2020, the Ministry of Education said that there were 14.3 million accompanying children of migrant workers in compulsory education in that year, and 86% were enrolled in public schools or government-purchased seats.

Barriers still exist in the largest cities, however, and enrolment access policies are particularly uneven in downtown areas of the largest cities, which typically also have the most competitive schools. Some recent studies have also noted that even when municipal policies are explicit, implementation at the district level may still lag. So, while access to education is now guaranteed in principle for the children of migrant workers, without owning a local property in their target school district, they may be forced to enrol in a less desirable school in the suburbs. At this point though, it’s no longer a uniquely hukou issue, as such scenarios are broadly comparable to school enrolment policies in other countries like the U.S.

Healthcare has followed a trajectory similar to education, but through different institutional channels. China has various public health insurance schemes for both urban and rural residents, but access to treatment, much like education, was originally tied to the place of hukou registration. Using healthcare services in another location would necessitate out-of-pocket payment and a tedious administrative process to secure reimbursement in the home province. Additionally, while inpatient services were almost always covered, certain types of medical treatments (e.g., for chronic diseases) were basically ineligible for cross-province coverage.

However, as early as the major reforms of 2009, China began progressively dismantling the healthcare access barriers faced by migrants and enhancing the portability of medical insurance across different regions. Most critically, this included a cross-provincial direct settlement system, which was piloted through the middle of the 2010s, in parallel with the rollout of the hukou conversion and education reforms. By 2021, this underlying system was largely in place, but usage rates were still weak, with even the most mature treatment category – inpatient treatment – using direct settlement less than 60% of the time, according to the public WeChat account of China Health Insurance Magazine.

2021 also appears to have been a tipping point, after which usage of the direct settlement system increased rapidly. By 2024, official statistics from China’s National Healthcare Security Administration showed cross‑provincial direct settlement systems in that year handled over 238 million healthcare cases, rising almost 85% year-over-year. Their data showed cross-provincial settlements reduced out-of-pocket payments by nearly RMB 200 billion and were now operating across a nationwide network of more than 640,000 medical institutions. Furthermore, because insurance enrolment itself had already shifted in most places from hukou‑based eligibility to residence‑based participation, migrants were generally able to access care and settle costs at the point of treatment at a level never enjoyed before.

Image of a pharmacy in Shanghai: “This store supports out-of-province medical insurance and pooled reimbursement”.

If Access to Public Services is Guaranteed, What’s the Point of Converting?

This is a fair question. After all, if your Anhui village hukou is no longer a barrier to receiving direct settlement of healthcare services in Shanghai on your rural health insurance plan, and your kids can attend Shanghai schools, what’s the benefit of switching to a Shanghai hukou? Switching into a better pension plan, but at the expense of losing your land? Once you deregister your home village hukou, you’re also at risk for your household to be unenrolled from the village land collective registry, sacrificing your precious (and unique!) land usage rights.

I’ve increasingly heard this in interviews with migrant workers in places like Shanghai, Hangzhou, or Wuxi, finding out they have no interest in converting to a local hukou – prioritizing the retirement optionality and the residual incomes that accrue from holding onto their rural land over the increasingly meager incremental benefits of changing to a local hukou.

A Shanghai citizen might even be tempted to ask whether they’re getting the short end of the stick these days. After all, the migrants who still hold hukou in their hometown while working in the city get to have their cake and eat it too, enjoying the benefits of collective land-usage rights AND access to top-quality urban public services. Urban residents are, of course, welcome to convert their hukou to a rural location somewhere, but this won’t grant them collective land-use rights.

With Hukou Reforming, What Is Left to Criticize?

In the process of these reforms, a familiar line of criticism has lost much of its bite, though not necessarily its audience. The hukou system has long served as a go-to example for commentators seeking to illustrate China’s structural inequities and authoritarian policymaking, often characterized as a rigid mechanism that traps migrants outside the benefits of urban life.

That framing is now increasingly out of date. As barriers to service access have weakened and migration has become far more flexible, the reality on the ground has grown more complex, and less supportive to simple narratives of exclusion and state control. Unfortunately, some commentary continues to lean on this older, caricaturized depiction, or even seeks out rationales for why the reforms themselves are actually signals of enhanced state control.

For instance, this 2022 paper published in China Quarterly suggested the reforms to the hukou “serve as a political contrivance for the survival of the Chinese party-state regime”, and proposed that the resulting system under the new reforms would be “an even stronger barrier”. Such commentary rarely reflects the reality of how the reforms have actually been implemented, and the persistence of the critiques says as much about the incentives of the commentators as it does about the system itself.

Where Do We Go Now?

There’s still a good distance between where we are now, and the “complete abolishment” of the hukou system (and that’s not to say that’s necessarily where Beijing is intending to go). China’s largest cities are still not fully convertible, and it’s not clear that they ever will be. Meanwhile, the readouts from the NHSA stop short of claiming “complete resolution” of access issues for migrant workers, implying there are still areas of uneven implementation. While concerns over some public resources are easing due to shrinking demand (children’s education, for example), other types of public resources are only going to be under more strain into the future (healthcare and eldercare) and cities will surely want to keep those most scarce resources available for local citizens.

In other words, what remains of the hukou system is less about restricting movement, and more about managing fiscal obligations. The most important question has evolved from “can migrants come and live here?” to “who pays for the long-term costs of social services?” That is a much more familiar question internationally. Whether you look at school district zoning in the U.S., residency requirements for social benefits in Europe, or local government financing constraints almost anywhere, the underlying issue is the same: public services are funded locally, and access for non-locals always entails some friction.

China is converging toward that global norm, albeit from a very different starting point and through a more administratively led system. The resident permit policies, points systems in top-tier cities, and the continued existence of local hukou thresholds are all techniques to help smooth that transition instead of eliminating it outright.

The more interesting question going forward is not whether hukou disappears, but whether the remaining distinctions between hukou in different regions, especially when it comes to pensions, fiscal transfers, and collective land use rights, can be resolved into a system understood as a set of trade-offs, instead of a barrier. It’s clear that the marginal benefits of converting continue to shrink in most of the country. As more migrants choose to retain their original registration location, the system will evolve too, into something that looks less like a rigid hierarchy, and more like a menu of different lifestyle choices. Whether external commentary keeps pace with that shift remains to be seen.

1. How much of the dissertation was written by Xi personally is always a question, but also not relevant in this case, since his name appears on the final document and thus can be considered representative of his views. But inquiring minds will wonder how a busy provincial leader in Fujian holding only a BS in chemical engineering completed a Doctor of Law in Marxist Theory in Beijing.

2. Despite this, it’s still common to hear people talking about “changing a rural hukou for an urban hukou” (农转非), even today. Strictly speaking, however, there has been no such thing since 2014.

3. Or Nanjing, which used to be jokingly referred to as Anhui’s “real capital” due to Hefei’s perceived weakness (not so sure how true that paradigm is anymore though).

4. In declining strictness, Beijing is classified as “very strict”, Shanghai, Guangzhou Shenzhen, and Tianjin are “relatively strict”, Xiamen and Zhongshan are “moderately strict” and Hangzhou and Suzhou are “somewhat strict”.

5. For instance, Shanghai has ~10 million non-hukou residents. With a threshold value of 85%, roughly 8.5 million of them still don’t qualify for a Shanghai hukou under the current points-based system. That’s a lot of people, but nowhere close to 240 million.