This Chinese Policy Change Is A MASSIVE Deal

Added: 2026-05-29

[00:00:00]This was a story that got lots of China watchers very excited this week. It's from the South China Morning Post and it reads, "China removes hookco hurdle for migrant workers in social insurance shakeup." Now, that might sound like a very technical story, esoteric even, but the hookco system is one of the most important policies enforced by the Chinese Communist Party. It's been in place since the late 1950s, affects hundreds of millions of people. People have been calling to get rid of it for decades and now it looks finally set to end potentially. Um so what is the hookco system? Well a hookco um is a household registration document which everyone in China has to have and that's the front of the booklet there. Um like a passport or any other ID card. It has your name, your date of birth, a few other identifying details. The key bit though is this. Um, the real importance of the hookco and why it's different to other national ID cards is that it defines you based on where you were born within China. So, any individual will be recorded as either rural or urban based on where they come from, um, as well as their city or province of origin. Um, and what's crucial about this is that your classification determines what kind of social benefits like healthare, schooling, or pensions you are entitled to receive. Um, since it was introduced in 1958, the hookco system has granted much more generous social rights to Chinese citizens with an urban hookco um, as opposed to ones with a rural hookco. So, you're massively advantaged basically if you get the urban one compared to the rural one. Now, that's led it to be criticized as a form of social apartheid. This is part of a documentary from ABC Australia on the hook system.

[00:01:39]>> You are not a local citizen. You cannot have access to good quality public school for your uh children. Your child cannot take national exam. You cannot have access to social housing. It is difficult for you to get full pension coverage as well. I think hook policy in a nutshell is discriminatory and it's inefficient. Until recently, rural hook holders weren't even allowed to move freely outside their hometowns. It was only in 2003 that the Chinese government abolished a policy that allowed local authorities to arrest and evict migrant workers in the cities.

[00:02:24]But many rural families like leans still choose to relocate to cities for better opportunities even though they aren't entitled to the same benefits as their peers.

[00:02:37]>> We were moving houses every year. We moved at least 20 times since we came to Shanghai more than 20 years ago.

[00:02:43]>> So why did China introduce such a discriminatory system? After all, the People's Republic of China was the creation of a peasant revolution. So why did rural people end up as secondclass citizens? Um well under Mao the idea was to keep more people in the countryside to help feed the country's urban population. Um which he you know thought would hopefully lead to industrialization. Now Mao's agricultural policies were completely disastrous led to the deaths of of millions of people. And if you had a rural hookah as well that meant that you couldn't go to urban areas where um people got a food ration in the countryside you're expected to get it from your own land. However, that was being um confiscated very bad. Um in the reform period under Deng Xiaoing, the hook system played a different role. So for critics on the left, the hook under Deng was a system which enabled the fast growing manufacturing industries um to better exploit migrant workers from the countryside. The logic is this. If your workers don't have social rights, they are cheaper to employ. So it's a a little bit like when people say, you know, businesses like to have precarious immigrant labor because they're easier to to exploit. the same argument can be made there. Um, however, those more sympathetic to Deng um, see the hook system as a policy which enabled China to quickly develop its economy without the creation of largecale slums. Um, so the logic here is fairly simple. If you have a country of over a billion people, you might not want everyone to rush into the few leading cities, say Beijing, Shanghai or Shenzhen. Um, and so the hook system provided the government with a means to manage urbanization in a more functional way. So you don't get sort of the same slums um you got to India or or Mexico's major cities. Um this latter analysis was shared by the World Bank who in a 2008 report said this. One of China's greatest successes in its rapid urbanization has been that it has managed to contain the process to the extent that there are crowded living conditions but very few slums. Um this is an important achievement for a developing country and they credited the hook system with that achievement. Um that's the background. Bringing us back to this week's news. Um what about this system has changed? Well, this is a report from Channel News Asia on the announcement made by the Chinese State Council last week. Um so they write this um the guidelines called for the complete elimination this is the the new guidelines from the Chinese government for the complete elimination of household registration restrictions on migrants participation in employee social insurance their access to basic medical security in their place of residents should be strengthened. The statement added, "The guidelines also proposed improving educational guarantees for migrant children, including increasing the proportion of them attending public schools during the compulsory education stage." It says promoting equal access to basic public services for non-registered permanent residents and registered residents is conducive to meeting the people's growing needs for a better life and releasing domestic demand potential, the state council said. So the article sort of goes on to say um that uh this is sort of hopefully um according to the Chinese government going to be able to increase consumption in the economy because if more people have social rights, more access to to to pensions, to welfare benefits, they're going to have to save a bit less um or they won't have to save quite as much and then they can spend money in the economy. Um also important to note, I mean this has been a huge sort of debate on Twitter, lots of people saying this isn't as black and white as you think. It's not that there was a hook system until last Friday and now it's gone. This has been loosening for a while. Um I think lots of the sort of midsize cities have loosened it for a long time because they actually have a labor shortage so they want more people in. But Beijing, Shanghai, all the big cities still have it quite strict because otherwise shed loads of people want to go there. Um Aaron, um lots of people saying this is by far the most important news in the world this month because it affects hundreds of millions of people in a very fundamental way and tells us something significant about Chinese development. What's your take, >> Michael? I want your take. You're the Navaro China guy.

[00:06:44]>> You know, I saw the way when you were talking about Mao and his agricultural policies, you pursed your lips.

[00:06:49]>> Yeah. You're you're you think I'm too harsh on my but of course the enlightened things happening and you sort of >> then I per your shoulders were broader I could see you breathing out a bit happier you know cheeks were rosier so maybe you talk about it >> well I mean I think this is interesting I mean >> I suppose what I find very interesting is the two ways that this is talked about right so Chinese leftists as well especially sort of Chinese troskists their position is that this was a form of internal colonization where you have a hook system to enable the hyper exploit exploit itation of the rural population and it's all framed in a very negative light. Um sort of Chinese leftists often don't really like Deng Xiaoping because they think that he brought too much capitalism to China and enabled the exploitation of workers. Now people who are more in favor of reform and opening are more in favor of of of Deng. They say you know as I explained there that this was necessary for development. And I think partly the way to understand that is that China isn't I mean it is a country but it's also a continent. So when people sort of say how can this country have internal restrictions on where people can move and how can you have different rights based on where you were born it's a bit like saying you know in in the whole of Europe at the beginning of development if anyone in Europe could move anywhere and get any kind of benefits it would be difficult to build up benefits in Britain if anyone could come there and get them immediately and it's kind of similar to that I mean it does seem very harsh because especially for young people and I think the darker part of it is that it seems like they wanted working age people to come to the cities to work in the factories or wherever the outskirts of cities, but they quite wanted their kids to stay home with their grandparents. And so the kids would go to school in the countryside and get looked after by their grandparents and then the parents would come to the midsize cities um and work very long hours without caring responsibilities. And you know, combine that with the one child policy and that seems quite harsh both on the parents and the kids. Even though, you know, I I can see why if you want to have super fast development without slums, then some kind of restrictions on movement are going to be necessary. That's my take.

[00:08:58]>> My my take is this is that lots of people in the west and in Britain will look at the coast, this is outrageous.

[00:09:03]It's appalling. We have exactly the same system in some respects. So if you look at for instance the NHS hugely dependent on importing um nurses, doctors, all kinds of labor from overseas, skilled labor um and we're basically making other places internalize those costs. So the hook system is similar in so much as the costs of raising those kids and the costs of looking after those kids once they return back to where they're from when they're elderly.

[00:09:33]the social reproduction, the social labor, other people can pay for that.

[00:09:38]But when they're working age and they can make a nice profit for the, you know, for a nice capitalist in in uh in urban China, let's have them. And this is talked about at length by Rosa Luxembourg. In terms of capitalism and exploitation, it's not just the wage labor relation where a worker is exploited by a capitalist and some value is skimmed off and that's profit. That's one relation, but she talks about others too. So you have other that's a wheel that's turning. Capital is value in motion. What's capital? Money that makes money. It's a wheel that's turning. And then at the same time you have another wheel that's turning which is the social reproduction which allows this other wheel to turn right which is primarily women but families raising kids and looking after old people. So that wheel which we never even talk about allows this bigger wheel to turn. And then of course another one is colonialism where you get cheap resources from places like the BRC or or wherever. cheap food, cheap energy. Uh, and that allows this world to turn as well. So, we think of capitalism as wage um and and labor, capital and labor, boss and worker. But there are these two other circles too which make that even plausible. Uh, one of them is that that wheel of social reproduction. So, hookco is actually just um an overt explicit admission of how capitalist systems often work. And and I think actually if you look at the NHS, it's just basically the same thing.

[00:11:01]You know, oh you can and and actually it's being even more overt now with people like Restore because they'll probably say, you know what, you can come here as a nurse from Nigeria for 5 years, but you can't claim any benefits at all. If you get sick, you can't get any benefits. You can't get any form of uh safety net. I I imagine at some point they'll probably start saying that these people can't get minimum wage either.

[00:11:20]>> And don't bring your kids.

[00:11:22]>> And don't bring your kids. Um you're just here to work, just here to help us make profit. And the costs of your training, they can be uh internalized by the the congalles, the Nigerian taxpayer. And the costs of you being raised can be internalized by your parents. And the costs of looking after you when you're old, well, they can be internalized by your children. So, it's outsourcing the costs to other places.

[00:11:44]So, it's it's a very universal phenomenon, but as you said at the start of the story, this is one of the big big global stories of this month, but also of Chinese capitalism over the last 40 years. Huge shift. But it's like you say, it's not like it came from nowhere.

[00:11:56]It's been it's been a it's been a transition. But I think to to to >> to declare it shifting like this is a big moment.

[00:12:03]>> What do you think about the framing though? I suppose cuz you're bringing in Rosa Luxembourg. You've got the kind of Chinese leftist sort of idea of this was internal colonization.

[00:12:13]This was hyperexloitation. And then you got the sort of more generous view of of Deng as sort of a pragmatist whereby yeah it wasn't necessarily like the most fair system but it was the system that brought China out of poverty. I don't know why you saw >> well I mean you don't need to call it hyper exploitation. It was exploitative.

[00:12:30]Um capitalism is exploitative markets markets are often exploitative. And I suppose the the denist argument and I don't know what Deng said about hookah but he would have said that this >> he kept it in place.

[00:12:40]>> Yeah. this is a necessary prerequisite to develop the means of production and to liberate unleash the forces of production and of course it's happened at the same time that they've eliminated rural poverty. So um I think it's it's it's it's part of a broader policy mix which clearly has left China in a better place today than it was 45 years ago. Uh but it was a very exploitive policy.

[00:13:02]Yeah.

[00:13:03]>> But so was like so were the five-year plans. Loads of bad stuff happened. I think if you look at certain outcomes, okay, well, the Soviet Union ends up in a better place after that than it does before. I'm not talking about the forced labor camps building, you know, canals or whatnot. I'm talking about steel production and so on. You know, you there was hyper exploitation of workers in certain industries to get production up and often that was accompanied actually by the workers themselves wanting to be exploited with things like stanovism and there was which was a grassroots bottomup social movement to contribute to revolutionary progress coming from the workers uh which were saying yeah we'll be more exploited than we'd like to be perhaps for a little while to help develop the means of production. similar thing going on here.

[00:13:42]>> Mhm. I suppose growth in China was so fast as well that it was I suppose the industrial revolution in in Britain, we kind of all benefited from it, but there was a generation or two who got really screwed.

[00:13:52]>> A few more than that, right?

[00:13:53]>> In in in China, it's the people getting screwed are the same people who get to benefit from it 20 or 30 years later.

[00:13:59]>> Well, if you look at the Angles pause, you've got basically between 1790 and the 1860s7s, you basically have flatlining or stagnating living standards for for working people.

[00:14:07]>> For how many years was that? Sorry.

[00:14:09]>> At least half a century. I think at least after I mean people actually wars the 1860s but I think you go back further that's not the case in China.

[00:14:17]>> Um let's wrap up there. Very interesting way to end the show. Thank you Aaron for joining me this evening.

[00:14:20]>> My pleasure Michael. Thanks everyone.

[00:14:23]>> Thank you for tuning in. Come back tomorrow for another live stream from 6 p.m. For now you've been watching Nvar Media. Good night.