In China, the place of your registration is as important as the place where you live. If you have migrated from a rural area to a city, secured a job, and spent decades building your life there, you may still not enjoy the same access to public services as local residents who are registered in the city. Much of this divide originates from hùkǒu (户口), China’s household registration system, which has long shaped access to education, healthcare, housing, social security, and other public services. In this sense, hùkǒu has drawn a line between being a resident of a city and having the rights and privileges of a local resident.
In May 2026, China announced the reforms to change this relationship. The central government has proposed making a person’s place of permanent residence the basis for access to public services rather than their place of registration. The reforms address the structural mismatch in China’s urbanisation process. Although restrictions on physical mobility were relaxed over time, this was not matched by an equivalent change in access to local public services. Public services and welfare often remained tied to household registration rather than actual place of residence. The recent reforms are therefore not just about where people are recorded, but where their claims to social entitlements are recognised. However, changing the principle may be more straightforward than changing the system in practice. China has sought to decouple hùkǒu status from migration and access to public services for more than a decade. The question is whether the equal distribution of residence-based rights can be achieved when local governments possess different fiscal and administrative capacities.
Why hùkǒu was never just registration
The hùkǒu system in China has never been just a record of where people live. The foundations of the household registration system were laid throughout the 1950s, but the 1958 regulations transformed it into a core institution of China’s planned economy. Urban residents benefited from state-backed employment, subsidised food, housing, education and healthcare. On the other hand, rural households depended more on agriculture and collective forms of provision. Hùkǒu thus determined both social membership and the boundaries of the state’s welfare obligations. The integration of the system with employment allocation, rationing, housing and welfare restricted movement of an individual beyond the registered locality. It was structured around two distinctions — first, hùkǒu type distinguished agricultural from non-agricultural status; and second, hùkǒu location determined the jurisdiction in which many benefits could be claimed. Here, the territorial dimension was fundamental, as registration linked individuals to both a particular jurisdiction and socioeconomic entitlements associated with that place.
Economic reforms further weakened the earlier arrangements. By the 1980s, people started migrating and working outside their registered locality but retained their original hùkǒu. The 1994 tax-sharing reform further strengthened the central government’s control over China’s overall fiscal revenues while leaving much of the responsibility for public-service spending with local governments. As a result, local governments remained responsible for education, healthcare and social protection despite the centralisation of fiscal authority. Administrative decentralisation also increased local discretion over hùkǒu admission and thereby made access to welfare more dependent on locality. This phenomenon is described as ‘dual migration circuits’ — one based on formal hùkǒu transfer and institutional membership, and the other on physical mobility without equivalent access to local rights. Thus, labour mobility was liberalised faster than welfare provisions. Subsequent reforms reduced the importance of the traditional rural-urban divide, but they did not eliminate regional inequalities. The divide shifted from rural and urban residents to locals and outsiders. The shift aimed to remove one form of inequality, but it failed to prevent the emergence of another.
What the 2026 reform changes — and what it does not
The 2026 reform attempts to limit the influence of hùkǒu on access to basic public services. In the past, migrants could reside and work in a city without securing equal access to these services. Access continued to be determined by hùkǒu. The latest reforms call for a gradual removal of hùkǒu restrictions on access to these services for migrant populations. They cover six areas that have long determined migrants’ access to public services — education, public rental housing, social insurance, healthcare, employment services, and basic social assistance. Some of the key measures include the removal of hùkǒu restrictions on social insurance at the place of employment, access to public rental housing for migrant families with stable employment and residence, and access to medical insurance through residence permits.
But for all that, it is important to understand that the recent reforms target the reliance of welfare on household registration, not household registration itself. Hùkǒu remains an administrative system, and the reforms do not abolish it but limit its influence on access to basic public services. Nor does the policy ensure that access becomes immediate and equal across all localities. Though it emphasises actual residence, residence-based eligibility does not necessarily guarantee equal access. Public rental housing, for instance, can still be allocated on the basis of employment and duration of residence. Provincial and municipal governments are instructed to implement the reforms in accordance with local conditions. Similarly, cities experiencing population inflows are encouraged to adopt ‘one city, one policy’ approaches. Previous reforms illustrate the limits of formal decoupling. Even after employment-based social insurance was opened irrespective of hùkǒu, local administrative programmes continued to vary in scope and benefits. Hence, the reforms put local capacity at the centre. Whether migrants have legal entitlement to public services is only one part of the equation. Local governments must also have the resources and incentives to provide these services on an equal basis.
The local limits of national reform
The implications of the 2026 reforms should be considered in localities with different levels of migrant inflows and fiscal resources. These differences stem from long-standing disparities in hùkǒu entry requirements among Chinese cities. Small cities have more flexible entry requirements since they provide limited job opportunities and public benefits, whereas large cities with generous welfare provisions impose more demanding conditions. Such differences extend beyond entry requirements, as variations in hùkǒu-related public services – such as education and healthcare – also influence migrant selection. Consequently, the recent reforms enter an institutional landscape that is already far from uniform.
Shanghai sits at the high-capacity, high-demand end of this spectrum. At the end of 2025, 39% of Shanghai’s permanent residents — 9.75 million out of 24.85 million — did not hold local hùkǒu. Shanghai’s general public budget revenue reached RMB 850.1 billion against RMB 997.6 billion in expenditure. Despite its strong fiscal capacity, the large non-local population creates sustained demand for schools, healthcare, housing and social protection. Earlier studies have pointed to a trade-off between migrant contribution and welfare costs. The latest framework raises questions about the scale of provision relative to fiscal capacity.
Chongqing presents a different picture from Shanghai. The city’s permanent resident urbanisation rate stood at 73%, with a population of 31.87 million in 2025. The same year, it reported public budget expenditure of RMB 569.1 billion, more than double its revenue of RMB 273.6 billion. Chongqing’s 2026 budget report also features support from the central government. It mentions the use of ‘citizenisation’ funds to incentivise districts that absorb a significant number of rural-to-urban migrants. This approach is consistent with Chongqing’s long-term reform trajectory. Its previous hùkǒu reforms responded to urbanisation and land-development objectives, in contrast to the labour-retention concerns of coastal Guangdong. It demonstrates how local incentives can produce different institutional outcomes.
The case of Guizhou sheds light on the issue from the perspective of a less urbanised province that is more dependent on support from the central government. In 2025, 57.7% of Guizhou’s 38.57 million residents lived in urban areas. Central transfers of RMB 385.9 billion exceeded its general public budget revenue of RMB 222.3 billion. The historical pattern suggests that Zunyi and similar cities maintained relatively low hùkǒu entry barriers, in part because membership in small cities offered less generous public benefits. Although the past entry requirements may not predict how the present reforms will be implemented, they explain the extent of territorial variation under previous reforms.
Together, these cases reveal that implementation varies across regions since each region has different fiscal and administrative capacities. Shanghai has strong revenues but faces high migrant demand; Chongqing receives substantial support because of its rapid urbanisation, and Guizhou depends more on central fiscal transfers to sustain basic public services within its jurisdiction. Fiscal responsibility has hitherto been central to hùkǒu reform, and the success of the residence-based entitlement rests on who pays for it.
China’s decentralised welfare system places much of the fiscal burden on local governments, which, more than 15 years ago, were already financing over 90% of spending on education, healthcare, housing and social security. This leads to a structural imbalance as migrants move across jurisdictions, but destination governments still bear the cost of serving them. The 2026 reforms acknowledge the need to align public resources with where people live and extend additional support to areas with population inflows. However, the real challenge will be how the reforms are implemented in places with different levels of resources and capacities. Therefore, whether public services and the resources behind them can follow people as readily as people follow jobs emerges as the ultimate question.
Image source: AI-generated via ChatGPT (OpenAI), based on the author’s concept.