China is introducing a sweeping reform to its outdated residence system, which divides its whole population into agricultural and non-agricultural categories.

The existing system, introduced in 1958 to meet the needs of a plan economy and restrict excessive growth of urban population, is now becoming a barrier to the free flow of human resources needed by a market economy.

Wu Dongli, a bureau chief with the Ministry of Public Security, said Wednesday small cities across China and a few medium-sized ones have begun to give farmers and their family members unrestricted access to permanent urban residence rights, provided they own residence in the cities and have stable sources of income.

Without permanent urban residence rights in China, people are not eligible for the wide-ranging essential benefits available to urbanites, including employment, education and social security.

The reform is changing all this, making unprecedented choices to its some 900 million countryside population.

Two months ago, a young man surnamed Liu from rural Hunan Province in central China, together with his family became permanent residents of Shijiazhuang, capital of north China's Hebei Province, thanks to a radical residence reform introduced on August 1 this year.

As a permanent resident in the city, Liu and his family are now eligible for a number of services previously reserved exclusively for local urban residents, such as access to local schooling for his three children.

The small and medium-sized cities that have permitted greater freedoms in residency are joined by many crowded cities such as Beijing, Shanghai, and Shenzhen, which offer flexible temporary residence permits to their much-needed professionals from other part of the country.

Hebei province, encircling Beijing, also plans to allow 10 million farmers to become permanent urban residents in small cities in the next five years.

Li Keqiang, governor of central China's Henan province, announced recently that a total of 15 to 18 million of the province's rural residents are expected to become permanent residents in small and medium-sized cities in the province over the coming five years.

South China's rich province of Guangdong, which borders Hong Kong, plans to scrap the practice of dividing its population into agricultural and non-agricultural categories.

Guangdong provincial officials said Guangdong will register its residents according to their places of residence, and introduce unified and non-discriminatory rights of abode to all residents in the province.

Cai Fang, director of the Population Institute of the Chinese Academy of Social Sciences, a major Chinese think-tank, said the outdated household registration system has long been blamed for inefficient distribution of human resources, resulting in an excessive concentration of people in urban areas and a brain drain from developing areas.

Economists say a free flow of human resources is a natural prerequisite for a market economy, and regional economic integration will be hindered if the restriction is not removed.

The system, which had remained virtually untouched until early this year, confines urban residents to cities and towns with housing, medical, education and employment benefits, and farmers to rural areas.

Farmers, however, are denied the benefits available to their urban counterparts and are permitted to seek only low-paying jobs shunned by urban residents.

Therefore, urban residents in China have been an object of envy by several hundred million rural countrymen, and becoming an city resident has been an impossible dream for the vast majority of rural Chinese.

The dream, however, appears to be within reach for many rural residents as China's 23 years reform and opening have left the system obsolete, and millions of farmers have been hired by companies in urban areas to meet the demand for blue-collar workers.

China plans to build 10,000 more key small cities and towns in the early part of this century to boost rural development and absorb more than 40 million of the country's 900 million rural residents.

About 55,000 small cities and towns have been built during the past several decades, turning 100 million rural residents into city dwellers.

At present, there are nearly 400 million people living in cities, setting a record urbanization rate of 30 percent, still less than the world's average urbanization rate of 50 percent.

But officials and experts have warned it takes a long time for crowded big cities in China to provide non-local residents with unrestricted access to residence and their employment markets.

They argued that the already overstrained infrastructure in big cities like Beijing and Shanghai cannot cope with the vast number of jobless laborers across the country, which some experts put it at least 200 million.

(People's Daily November 1, 2001)