Hukou reform too costly for cities facing cash crunch

Nearly all the mayors interviewed by a multi-agency research team suggested their cities cannot afford to reform the household registration, or hukou system, which if implemented would provide hundreds of millions of migrant workers with better social benefits, the Economy and Nation Weekly reported Monday.

"The reforms are sensitive as they are closely linked to a list of benefits cities would have to provide including education and medical insurance," said Qiu Aijun, an official from the National Development and Reform Commission (NDRC).

Li Tie, another NDRC official, said local officials are unwilling to support the reforms because of budgetary pressures.

"Local governments rely heavily on land transfer as their major source of fiscal income," said Li, adding that the restriction on home purchases have caused a drop in municipal revenues.

The research team conducted interviews with city leaders in eight provinces between April and May.

While over 51 percent of the population now lives in cities, only 35 percent of them possess an urban hukou, leaving some 65 percent of the urban population without benefits from the city in which they live.

Some 211 million migrant workers and 70 million others could potentially qualify for improved benefits, said the report.

The central government officially started to reform the country's hukou system in a 2011 circular, which stipulates that cities below the prefecture level should loosen the system.