After more than 20 years in downtown southwest China's Chongqing municipality as a migrant worker with no house and no stable job, Xu Shuping has finally settled.

Xu, 40, a welder at the Chongqing Gas Group Corporation Ltd., will be attending a staff training course, only open for formal employees, next month thanks to the "hukou", or household registration.

Xu got his job after he was transferred from "agricultural household" status to "non-agricultural household" status three years ago when Chongqing launched changes to its household registration system in 2010.

The goal was to turn 10 million rural migrant workers into urban citizens by 2020.

Up till now, about four million rural residents in Chongqing have obtained their city "hukou" or "non-agricultural household" status. Xu, from Anshun Village, Changshou District, Chongqing is one of them, as is his wife and 16-year-old daughter.

China's "hukou" system was set up in 1958 to control the movement of people between urban and rural areas. Household registration is tied to one's place of residence and is used to obtain access to basic welfare and public services.

The way the registration is categorized has created an urban-rural divide. People working in cities but still holding their official rural status do not enjoy the health care, education and social insurance offered to urbanites.

Chongqing's move aimed to reduce this divide and lower the threshold for rural residents to settle down in cities, said Xu Qiang, vice director of a task force set up to carry out the reform.

Under the regulations, rural workers employed in downtown areas of Chongqing for five years or in remote county seats for three years can apply to become urban citizens.

The government also offered preferential policies for those who applied for non-agricultural status. They are allowed to retain use of the land their rural home is on after they become urbanites.

Changes to the hukou system have also taken place in provinces of Sichuan and Guangdong, as well as Shanghai municipality.

In February 2012, the central government issued a circular urging local governments to speed up household registration system reform and not to link employment and education policies with household registration.

Premier Li Keqiang stressed at this year's annual sessions of the National People's Congress and Chinese People's Political Consultative Conference in March that China will put people first when it comes to urbanization.

According to a plan introduced by the State Council in May in a bid to invigorate the Chinese economy, a new city residential permit system will eventually replace the half-century-old household registration system, and public services and the social welfare system should be improved.

Further reform is called for to assist and help accelerate the process of urbanization.

China's urbanization rate reached 52.57 percent by the end of 2012 but about 200 million new urbanites still do not have urban permanent resident permits, according to the 2012 City Development Report of China released in July.

"The majority of migrant workers and farmers-turned-city dwellers have no city hukou and find it hard to blend into urban life," Xu Qiang said.

"They dare not to buy things in cities nor do they give up their farmland in rural areas since they are haunted by the feeling that they won't be accepted by the city and will have to retreat to rural life again one day," Xu Qiang said.

This has a knock-on effect, as it is difficult to promote consumption. Meanwhile, China's urbanization quality and the process of agricultural modernization will also be affected, according to Xu Qiang.

It has been argued that it will not be easy to implement household reform across China as it demands strong financial support from local governments.

China has more than 200 million migrant workers working in cities. If they enjoyed the same welfare as urban citizens, local governments would have to shoulder more pressures to ensure basic social services such as affordable housing, education and medical services.

Li Tie, director of the China Center for Urban Development under the National Development and Reform Commission, suggested the country should not pin all its hopes on local governments. Governments, companies and individuals should all contribute to household registration reform. Endi