Facing accelerating population outflows and collapsing local finances, the Chinese Communist Party’s State Council on May 22 released a new policy to expand public services for non-registered residents in second- and third-tier cities, in a clear bid to keep migrant workers and their families as permanent consumers and taxpayers.
The document, titled “Implementation Opinions on Promoting Basic Public Services in Places of Permanent Residence,” promises broader access to education, housing, and social insurance for people living in cities without local hukou (household registration).
Core Policy Measures
- Include migrant children in preschool and high school public education.
- Expand public rental housing to cover stable but unregistered long-term residents.
- Allow flexible workers and rural migrants to join housing provident funds.
- Fully cancel hukou restrictions for participating in employee social insurance at the place of employment.
- Promote mutual recognition of residence permits across regions.
Scholars: A Desperate “Save the City” Move
Economic commentator Li Xiao told The Epoch Times the policy reveals how quickly population inflows into second- and third-tier cities have dried up. Local governments that once feared being overwhelmed by migrants are now panicking because “nobody is coming.”
“Many second- and third-tier cities, even with falling house prices, have no buyers. Friends say the Northeast is turning into ghost cities. This is essentially an emergency market rescue measure,” Li said.
Financial analyst Song Huan was more blunt, calling it a scheme to replenish shrinking pension and medical insurance funds. With severe depopulation and aging, authorities need working-age people to keep paying into the system. He described it as another way of “harvesting the leeks” — exploiting ordinary citizens to fill fiscal holes left by local governments’ mismanagement.
Why This Matters: China’s Hukou System Explained
For Western readers, China’s hukou system functions like an internal passport. Every citizen is officially registered in a specific city or village (usually their birthplace). Most public benefits — good schools, healthcare subsidies, pensions, and social housing — are tied to this registration, not where a person actually lives and works. This has created a massive underclass of rural migrants who live and labor in cities for years but remain second-class citizens with limited rights.
The new policy does not abolish the hukou system. It only offers limited, selective benefits to encourage people to stay without granting full local citizenship.
Background: Real Estate Slump, Ghost Buildings, and Demographic Crisis
China’s population fell for the fourth straight year in 2025, with heavy outflows from central, western, and northeastern provinces. Meanwhile, the real estate market remains in deep distress. Many third- and fourth-tier cities are plagued with empty “ghost buildings” — entire residential complexes that stand dark at night due to massive oversupply.
Local governments, long dependent on land sales and property development for revenue, are now under extreme fiscal pressure. The new policy also calls for aligning fiscal transfers and new construction land quotas with permanent resident numbers, signaling Beijing’s attempt to reconfigure urban governance around population retention rather than growth.
Netizens Not Buying the “Benevolence”
Online commentators largely dismissed the move as self-serving. One netizen, Mr. Huang, said many videos frame it as government kindness, but the real goal is obvious: “They want people already in the cities to stay permanently. Only with a stable population can the authorities continue to make money from them.”
Most observers remain skeptical that the CCP will ever truly dismantle the hukou barriers that have served as a powerful tool of social control for decades.
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