China to ease internal migration curbs this year to lift virus-hit economy

BEIJING (Reuters) - China will loosen residency rules this year to make it easier for people in rural areas to move to small cities, in an effort to ease labour shortages and boost consumption in an economy jolted by the coronavirus crisis.

China will completely abolish household registration permits for cities with populations of less than 3 million for all out-of-towners, its top economic planner said on Thursday.

Such permits, known as “hukou”, have been used to control internal migration in China since the 1950s. The easing of such controls would help bridge labour shortages in hundreds of small cities in various stages of developing new industries.

An influx of rural workers would also help boost urban consumption, particularly through purchases of homes, previously denied to out-of-towners due to their rural “hukou” status.

China aims to turn 100 million rural people into urban dwellers, the National Development and Reform Commission (NDRC) said in a statement on its website.

As of last year, China had 848 million urban residents, or 60.6% of the country’s entire population.

For bigger cities, or those with populations of more than 3 million, restrictions should be removed for certain groups of people, such as migrant workers with stable jobs in cities and college students from rural areas, the state planner said.

The government will also make efforts to ensure rural workers living in cities have access to basic public services, such as education, healthcare and housing services, according to the statement.

Analysts expect a deep first-quarter economic contraction in China due to the coronavirus outbreak.

“The further relaxation of urban residency permits... especially at present, is of great significance to boost investment, consumption, and enhance the resilience of economic and social development after the outbreak,” state media quoted Feng Kui, an expert with China’s Urban Reform and Development Centre, as saying.

Reporting by Lusha Zhang and Ryan Woo; Editing by Shri Navaratnam