Nowadays, heath care services and good universities are

Nowadays, the problem of Hukou systemis important, because the more and more people live and work outsidetheir hometowns and it’s create unequal distribution of resources.The Hukou system is a legal system,that enables government to collect residents’ information, such as name,parents, date of birth and so on.

Also, this system serves as a tool ofregulating population distribution and rural-to-urban migration. According tothe Sheehan (2017),” The hukou system designates aresident’s status as being either rural or urban based on their registeredbirthplace”. Consequently, it means that a person from the rural area is notable to get public services or benefits in Beijing, in spite of living andworking in the city. For example, heath care services and good universities areavailable only in big cities like Shanghai or Beijing, and people who havehukou of these cities have advantage to get access to these benefits. Obviously,hukou in big cities is attractive and people are ready to pay high price to buya house to get urban hukou. For that reason prices in big cities are very high.

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   Another possible reason for highprices is urbanization.Since 2009, prices for houses inChina have jumped by more than 60 percent. The high prices for houses madehousing market unaffordable for people with low and medium income.

Theincreasing housing prices in China is a big issue, because it can lead tofurther increase in inequality. High increase in housing prices can beexplained by huge demand but limited land supply. High demand is due to rapidurbanization over the past several years, which resulted in about 780 millionurban populations. (The World Bank)            In1960, urban population in China was about 19%, whereas urban population inJapan was about 63%. (The World Bank).

Therefore, low urbanization level couldlead to serious impact on driving force of Chinese economy which isconsumption. Although, Chinese economy is growing fast with stable rate of 6.8%, the household consumption accounts for 37% of GDP, which is low incomparison with the United States where the household consumption is about 70%of GDP. The reason for low consumption in China is that more than 50% of thepopulation lives in the rural areas. Hence, to sustain stable growth of Chineseeconomy, the consumption rate or the potential demand should be increased.Urbanization can lead to the high consumption and therefore high demand bydecreasing the number of rural population. When the proportion of China’surban population increases by 1 percent, its direct effect can boost GDP growthof 1.5 percent.

Therefore, urbanization has become a leader in the new periodof economic growth.            Currently,urban population growth rate in China is 2,6% annually. According to the WorldBank, about 20 million people moving to urban areas annually and per capitaliving space in China in urban areas is about 36.9 square meters, consequentlyit means that annually urban housing needs are 738 million square meters. (Statista, 2017). 

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