Hukou used as bait for talent
Local housing markets heat up as side effect of talent policies in Chinese cities
In recent months, local Chinese governments have been engaged in a race to attract talent, with first-tier and smaller cities all launching measures to help skilled people get local hukou, which means permanent residence in English. As a result, the real estate markets in certain cities with those policies, especially second-tier cities, have to a certain extent been heating up. But experts caution that hukou alone will not be enough to attract talented people unless industrial and employment conditions improve as well.
Chinese cities, including first-tier cities and smaller ones, are fiercely competing to attract skilled Chinese people by enticing them with hukou, or permanent residence.
On April 9, the Beijing municipal government launched a point-based
hukou application system for non-Beijingers who hope to become permanent urban residents of the city.
Under the new policy, non-natives of the city below the legal retirement age who have held a Beijing temporary residence permit within the city’s social insurance records for seven consecutive years and don’t have a criminal record are now eligible to accumulate points for their hukou application.
However, the government hasn’t yet specified exactly how many points applicants need to accumulate to meet the basic application requirements.
What is known is that certain elite members of China’s workforce, such as those who have invested or worked in startups or science labs, are likely to reach higher scores in the point-based competition.
Different thresholds
Kathleen Lü, a native of East China’s Jiangsu Province who works in a foreign manufacturing company in Beijing, said that she currently doesn’t meet the requirement of the seven-year social insurance record, but that the new policy has given her at least “some hope” for settling down in the city.
According to Lü, before the new policy was launched, some employees of companies, mostly State-owned ones, were already qualified for a
hukou, but reaching that quota is often unattainable for employees in foreign enterprises like hers. “Also, as the exact threshold [ for a
hukou] has not yet been specified, I fear the policy is still not transparent enough,” she said.
The Shanghai municipal government also launched a guideline on March 26 which noted that skilled workers from 13 scientific areas including photonics and aerospace can directly get a hukou in Shanghai.
Prior to the guideline, Shanghai had already offered a number of preferential conditions for such hukou applications. For example, government identified senior management officials and entrepreneurs could already directly apply for a Shanghai hukou.
Several non-Shanghainese, who are currently working in Shanghai, told the Global Times on Wednesday that getting a hukou in the city is still demanding, not only because of the detailed and harsh requirements, but also because of the long approval process which often takes several months.
Compared with first-tier cities, the bonuses of getting a hukou are much stronger in smaller cities. For example, the local government of Xi’an in Northwest China’s Shaanxi Province announced on March 22 that local university residents can get a direct hukou after they graduate.
Some cities, like Shijiazhuang, capital of North China’s Hebei Province, and Ji’nan, capital of East China’s Shandong Province, have also offered house-purchasing subsidies for top talent who want local residence, according to media reports.
Housing market heat
One “side effect” of the move to attract more talent with hukou is the spike in local housing markets, particularly in some second-tier cities.
In Xi’an, for example, the real estate market has been heating up in recent months as non-locals crowd in.
The local government disclosed in a Weibo post on Wednesday that in the first three months of 2018, nearly 210,000 people were issued with a hukou in the city, compared with 250,000 new hukou issued in the city in the whole of 2017.
Zhu Yang, a real estate consultant based in Xi’an, said that in recent months, the rise in the number of non-locals has indeed stimulated a rise in average housing prices.
“The local government is of course also watching out for fluctuations in house prices with measures launched to restrict house-purchasing, so the market has not been too out of shape,” she told the Global Times.
For example, Yuemeiguoji, a property project in Xi’an, saw house prices surge from about 9,500 yuan ($1,515) per square meter in February to 10,500 yuan in March, data from domestic housing information website fang.com showed.
Data released by the National Bureau of Statistics on Wednesday showed that the prices of new homes in
Xi’an rose by 0.9 percent on a monthly basis in March. Overall, 55 out of 70 major Chinese cities saw their housing prices rise on a monthly basis that same month.
Xue Jianxiong, president of Shanghai-based asset management firm UTC, said that strong policy stimulus can bring about a rise in the rigid demands of purchases of homes in second-tier cities. By comparison, in first-tier cities such as Beijing, the threshold for hukou attainment is still very high.
“In first-tier cities, hukou policies are tilting toward a small group of elite members, so they should drive up the sales of qualified and medium-level real estate projects, but on the whole, the impact of those policies on the overall housing market is [currently] unperceivable,” Xue told the Global Times.
He also noted that for certain second-tier cities where housing prices have been slumping because of government regulation, such as in Nanjing, capital of East China’s Jiangsu Province, the hukou policies there can be a balancing force.
Yan Yuejin, a research director at the Shanghai-based E-house China R&D Institute, said that the effects of those policies will likely initially manifest in the renting market, he told the Global Times on Wednesday.
Song Ding, a research fellow at the China Development Institute, noted that China’s housing price regulation will be a long-term mechanism and won’t be swayed by the talent attraction policies.
Economic bonuses
Zhang Ning, a research fellow at the National Academy of Economic Strategy under the Chinese Academy of Social Sciences, noted that local governments’ talent policies will exert multi-faceted positive effects on local economies.
For example, with China’s increasing aging population, local governments need methods to cope with rising pension expenditure pressure, and the increasing young labor force, as most local hukou policies target younger generations, can be a good solution.
“Furthermore, such policies can boost local GDP and increase tax incomes for second-tier cities. For bigger cities that don’t have such a big tax burden, they are pursuing talent to achieve industrial upgrades,” Zhang told the Global Times on Tuesday.
Song also said that it is not enough to incentivize talented individuals with hukou. “Employment and industries must catch up with talent policies, otherwise skilled workers won’t stay for a long time,” he noted.
According to Zhang, hukou policies should be a short-term solution, while in the longer term, local governments should work toward a fairer business environment and better support for administrative services.