China Ends Hukou Link to Public Services in Landmark Reform

China’s State Council has issued a landmark directive that severs the decades-old link between household registration (hukou) and access to basic public services, ordering local governments to provide education, healthcare, housing, and social security based on where people actually live rather than where they were born. The policy, signed on May 18 and publicly released on May 22, represents the most significant step in hukou reform in recent years and could affect hundreds of millions of internal migrants, according to Xinhua News Agency.

A Historic Break from the Hukou System

Established in the 1950s, China’s hukou system was designed to control internal migration by tying access to public services to a person’s place of birth registration. For decades, migrant workers who moved to cities for employment were classified as “unregistered” residents, contributing to urban economies while being denied equal access to schools, hospitals, and social insurance.

The gap between China’s registered-population urbanization rate and its permanent-resident urbanization rate has remained at around 17 percentage points, reflecting the scale of the challenge. The new State Council directive, formally titled the “Implementation Opinions on Promoting the Provision of Basic Public Services Based on Permanent Residence” (Document No. 11 of 2026), aims to close that gap by mandating that basic public services “follow the people.”

Six Key Areas of Reform

The document outlines six priority areas for reform, as detailed by CCTV:

Education: Local governments must increase the proportion of migrant children enrolled in public schools during compulsory education and extend services to include preschool and high school. School transfer policies must accommodate families who move for work.

Housing: More cities are required to include non-registered permanent residents in public rental housing schemes, with eligibility determined by employment duration and housing need rather than hukou status.

Social Insurance: All户籍 restrictions on participating in employee social insurance at the place of employment are eliminated, extending coverage to migrant workers, flexible employees, and workers in the gig economy.

Healthcare: Residence permit holders must receive the same fiscal subsidies for basic medical insurance as registered residents, and cross-regional medical bill settlement will be expanded.

Employment: Public employment services and entrepreneurship support must be extended to unregistered permanent residents, including access to vocational training and skill certification.

Social Safety Net: Child care, elderly care, social assistance, and disability support services will gradually be opened to all permanent residents regardless of hukou status.

Expert Reactions and Economic Significance

Zhang Linshan, a researcher at the Macroeconomic Research Institute of the National Development and Reform Commission, told Xinhua that the policy is “timely and very necessary,” noting that it addresses long-standing gaps in basic public service provision. Dong Yu, Executive Vice President of the China Institute for Development Planning at Tsinghua University, emphasized the need to “accelerate the construction of a policy support system that adapts to public services following people.”

The economic implications are significant. As Reuters reported, the changes “could provide a stronger social safety net for households and potentially bolster consumer demand in the export-reliant Chinese economy.” By reducing the need for precautionary savings among migrant workers, the policy could help rebalance China’s economy toward domestic consumption—a long-standing goal of Beijing’s economic strategy.

Implementation Challenges Ahead

While the policy direction is clear, implementation poses significant challenges. The document acknowledges that megacities such as Beijing and Shanghai must “explore according to city conditions,” suggesting flexibility that could slow progress in the largest urban centers. The directive also allows for “gradient supply” of services where demand exceeds supply, potentially creating tiered access in the short term.

Fiscal sustainability is another concern. Expanding services to large migrant populations requires substantial funding, and the document calls for improved fiscal transfers from provincial and central governments to population-inflow areas. The National Development and Reform Commission has been tasked with monitoring progress and guiding cities to develop tailored implementation plans—described as “one city, one policy.”

A Milestone in China’s Urbanization Drive

The policy fulfills commitments made in the “15th Five-Year Plan” and the 2025 Government Work Report, both of which called for “comprehensively promoting the provision of basic public services based on permanent residence.” It builds on more than a decade of incremental hukou reform that has gradually relaxed restrictions in smaller cities.

The People’s Daily featured the announcement on its front page on May 23, underscoring the policy’s national significance. As China continues its transition from an export-driven to a consumption-driven economy, the success of this reform will be measured not only in policy documents but in whether hundreds of millions of migrant workers and their families can finally access the services they have long been denied.

What to Watch

Key developments to monitor include how megacities adapt the policy to their population management objectives, the specific fiscal transfer mechanisms established to support implementation, and whether the “gradient supply” provisions create meaningful access or de facto tiered service levels. The policy’s impact on domestic consumption and urbanization quality will also be closely watched by economists and policymakers alike.