here remains little doubt that China’s rapid economic growth and political consolidation over the past half century has established the nation as one of the world’s premier geopolitical powers. Decades of unparalleled GDP expansion have seen it climb to become an unquestionable mainstay in the 21st century global order. The ambitious Belt and Road Initiative has emerged as a major threat to western economic hegemony, positioning China as a powerful ally of the developing world and undermining the ambitions of western aid programs. Recent controversies involving the censorship of voices critical of Chinese governance by American companies show how deeply entrenched it has already become in the global economy, and the construction of artificial islands in the territory battle for the South China Sea puts the nation’s creativity and credible commitment to ideology on full display.
China’s rapid growth has stood as a monument against the Washington Consensus—a signal to all that the neoliberal order that has long dominated international politics can be challenged. But as growth gradually slows, the consequences of the nation’s Icarus-like ascension are becoming painfully obvious. China now boasts levels of economic inequality that are among the world’s worst.
Despite making massive strides in reducing poverty and expanding economic opportunities, China’s growth has not been distributed equally. The top earners have seen their wealth grow up to 3x as fast as the nation’s bottom 50%, and the share of national income possessed by the working class has plummeted as the ultra-rich reap the benefits of modernization. With protests in Hong Kong raging on, it is important to note that the special economic zone’s Gini coefficient is .539 (0 representing perfect equality, 1 representing maximum inequality), solidifying it as less equal than the Chinese mainland and the vast majority of the developing world. As China settles in to a more stable pattern of national growth, it is becoming obvious that the fruits of its success have yet to become available to everyone—and nowhere is this clearer than in the divide between urban and rural populations. China’s system of hokou—home registration—has regimented the nation into two distinct and unequal castes.
Today, holders of rural hukou are ostracized and discriminated against by their fellow citizens, and have little choice but to take on the most dangerous, demanding, and low-paying jobs that those with urban hukou wouldn’t dare involve themselves in.
Established in 1958, the practice was meant to allow the nation to bypass a number of growing pains that had plagued developing economies in the past. This was achieved by classifying each Chinese citizen in a category—rural or urban—upon birth, and affording them certain privileges based on the distinction, with transfer between classes heavily limited. In practice, this has resulted in the exclusion of the rural class from social welfare programs, including subsidized housing, disability benefits, healthcare, and subsidized education. In doing this, China was able to address excess levels of internal migration to urban centers, hypothetically ensuring that agricultural output remained high enough to support the nation’s rapid modernization while simultaneously preventing the rise of slums. Additionally, the system carried the more implicit benefit of ensuring reliance upon social services by the urban population, ensuring the regime’s stability during a time of rapid, uncertain growth. Today, holders of rural hukou are ostracized and discriminated against by their fellow citizens, and have little choice but to take on the most dangerous, demanding, and low-paying jobs that those with urban hukou wouldn’t dare involve themselves in. There exists little escape from this unequal treatment—upon moving to urban areas, rural residents can expect to earn nearly 40% less on average than a natural-born urban citizen, and the rural share of national income has plummeted from 70% to 20% over the course of the last three decades.
While reforms over the past decade have slightly lessened the hukou system’s strict conditions and allowed rural citizens to more easily transfer their citizenship, substantial divides still exist, with higher tuition prices and career restrictions remaining commonplace for urban outsiders. It will likely take decades to dispel the divisive cultural attitudes and social cleavages it has created.
As the cracks in the armor continue to grow, China is faced with substantial policy questions. Continuing to relax requirements for having one’s hukou changed is out of the question as a comprehensive solution—those who transfer to an urban hukou as adults find substantially less economic success than those who are born with one. They are more likely to be unemployed, less likely to possess healthcare, and rarely have the chance to earn quality education. Short of a complete elimination of the registration system, it is unlikely that these disparities in success will disappear soon.
The educational divide has created a self-fulfilling cycle in which holders of rural hukou are not only denied the opportunity to easily pursue higher education, but are excluded from urban jobs that emphasize it, leading to a lack of motivation among rural residents to attempt to cross boundaries. Perhaps more pressing than this is that the hukou’s longevity has created salient cultural divides out of thin air. After decades of being afforded special privileges, holders of urban hukou are in no rush to spread their winnings to the rest of China. Many view access to higher education and employment as a sort of birthright, and fear that removing their exclusivity will strain the already densely populated urban centers across the nation.
China has unwittingly divided itself into two separate nations; one that has enjoyed the fruits of rapid economic growth, and one that has been left watching from the sidelines. Income inequality is something that nearly every emerging economy has faced, but inequality of economic opportunity and social stratification will permanently hamper development prospects. Xi Jinping continues to look outwards in his attempt to construct a new silk road across Asia, but internal reflection is desperately needed before the hukou system devours China from within.