Addressing China's Social Inequality Through Hukou Reform

China's Chongqing municipality launched a program in August 2010 to reform hukou, the permanent residency identification system. The system divided rural and urban hukou holders, with the latter receiving greater social benefits, leading to a disparity in living standards and hurdles to economic reform. The hukou reform effort aims to reduce disparities while managing migration to urban centers. Some city governments have attempted to pay for the higher social spending by requiring rural hukou holders to forfeit their ownership interests in rural land in exchange for urban hukou status, but this has become problematic as land values rise.