PBOC Adviser Calls for Giving Migrants Same Status as Locals to Boost Spending

(Bloomberg) -- Providing migrant workers in Chinese cities with full access to local government services would boost their consumption by as much as 30% and help China double its middle-income population, an adviser to China’s central bank said.

Nearly 64% of Chinese people live in towns and cities, but only a bit more than 45% have an urban “hukou,” an official document providing full access to local public services such as schools and hospitals, Cai Fang, a member of the People’s Bank of China’s monetary policy committee, said in a speech posted online.

Granting city residents full urban hukou status would unleash potential spending, Cai said, citing research that migrants would boost consumption by 27%-30% if they had such a status. 

Beijing in recent years has been reducing the link between hukou status and access to services. China’s government said last year the status would be eliminated in cities with fewer than 3 million residents and relaxed in cities with populations of 3 million to 5 million. Local governments have long resisted such plans, citing fiscal constraints.

‘Common Prosperity’

President Xi Jinping called in August for expanding China’s middle-income population as part of a push for “common prosperity.” Economists linked to the government have said the country should aim to double the size of that group, which now numbers about 400 million.

Cai said growing China’s urban population would be key to that goal. 

“Urbanization can also set up social ladders, allowing migrant workers and their families to move upward in terms of education level, occupational category, income level and social identity, and truly become a middle-income group,” he said.

Cai, who is also an economist at China’s Academy of Social Sciences, argued last month that authorities should strengthen efforts to control technology companies’ expansion because the development of internet platforms leads to a “winner takes all” dynamic, increasing inequality and slowing economic growth.

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