On July 30, the State Council promulgated the Guidelines on Further Promoting Household Permit System Reform(“Household Permit Guidelines”), which marks a major breakthrough in China’s efforts to reform the household permit (hukou) system and may lead to a more mobile and flexible workforce.

Based on the Household Permit Guidelines, China aims to establish a new, unified household permit system that no longer classifies citizens as rural or urban household permit holders. The state's policy goal is that by the year 2020, approximately 100 million rural and other migrants will obtain household permits in the city where they live.

The Household Permit Guidelines divide cities in China into four types based on the city population, and provide for different household permit policies accordingly, with smaller towns and cities eliminating or significantly reducing the restrictions on obtaining a local household permit. In megacities with more than five million residents (such as Beijing and Shanghai), a points system should be established whereby if certain conditions are met regarding years of continuous residency and social insurance, a person may qualify for a local household permit (some cities, like Beijing, currently have no such points system and make it very difficult for outsiders to ever qualify).

The Household Permit Guidelines also provides for a new residency permit system under which when a citizen leaves his/her official hometown to reside in a municipality for half a year or more, the citizen will need to obtain a local residency permit, based on which the citizen will be eligible for certain benefits that a local household permit holder would be entitled to such as basic public education for children, basic medical services, family planning services, etc. In addition, based on other conditions such as one’s continuous years of local residency and years of social insurance contributions, the individual may also be eligible for vocational educational subsidies, employment assistance, housing benefits, old-age care, and other local social benefits.

To achieve the goals set out in the Household Permit Guidelines, the Household Permit Guidelines call on various government ministries to promulgate specific implementing rules to address with more specificity the points discussed above. It remains to be seen when and how the implementing rules will be promulgated and implemented.

In a related development, a law school graduate from Anhui province brought a household permit discrimination lawsuit against the Huma Resources Service Center of Gulou District in Nanjing City; according to local media, this was the first case of its kind brought in the PRC. The case ultimately settled so it is unclear how the courts would have ruled on the case.  However, the case does show that job applicants’ awareness of anti-discrimination principles is increasing and that they are willing to bring legal action for alleged violations in this area.