RURAL INTRUSION

The city is undergoing an unprecedented expansion, which means the local government is acquiring evermore rural land for construction.

"A rural resident can earn tens of thousands of yuan from the requisition of land, and the compensation is likely to rise," says a city official who refused to be named.

Wang Huizhong, director of the Zhejiang Provincial Public Security Department, says the change of the residence status of the civil servants from urban to rural was an "intrusion" into the benefits of the farmers.

The amount of the compensation for land requisition in each village is fixed and evenly distributed to each resident as a dividend under the joint-stock system of the rural collective economy.

More rural residents means less money allocated to each person, says Wang.

"Obviously, the actions of the civil servants infringed on the rights of the farmers, which could lead to social unrest if our government just stands by and watches this trend grow," Wang says.

Increasingly rural migrants are unwilling to change their hukou from rural to urban even when they qualify after years of working in cities.

Only 189,000 rural migrants gave up their rural hukou last year in Zhejiang, down 67 percent from the 577,000 who changed in 2004. By contrast, the number of rural residents migrating to cities to work rose from 2.04 million in 2004 to 3.06 million last year.

But the high costs of living and falling incomes in Chinese cities is also driving city residents to seek rural hukou.

Zhao Wenqi quit Hangzhou, where he lived for 40 years, and moved to a town to the north.

"I sold my small house in downtown Hangzhou and bought a big house in the rural area," says Zhou. "Life in a small town is so much cheaper."

Pan Changsheng, 40, a migrant worker in Wenzhou City, is considering going home to the countryside.

"The incomes of many migrant workers is far below those of rural residents," Pan says. "More and more migrant workers are going home to do business."

FRAUD MIGRANTS

Gu Yikang, an expert on rural issues at Zhejiang University, says the demand for rural hukou indicates the possible slowing of the pace of urbanization to the detriment of the wider economy.

Less than 46 percent of China's population lives in cities compared with more than 90 percent on average in the developed world.

Gu says the level of urbanization is an important benchmark for an economy transforming from poverty to middle income, as a growing urban population means more construction and more jobs.

The government needs to raise urban living standards, says Gu. "We must strive to increase the incomes of the city residents, cut unemployment, improve basic infrastructure and construct more affordable homes."

However, Tong Ruihui, of the provincial agriculture department, says hukou fraud is the root cause of emigration from cities.

The hukou system segregated the rural and the urban populations, initially in geographical terms, but more fundamentally, in social, economic and political terms, he says.

It is high time for China to cut the link between allocation of land and hukou, Tong says. "Only by stripping social security from household registration can we ensure migration is in accordance with market rules and maintain a healthy economic development."