Funding hukou reforms associated with real urbanisation in China
Comments on Cai Fang and Wang Meiyan, Chinese Academy of Social Sciences, and Guo Zhenwei, National Research Institute for Health and Family Planning of China: "A new model of urbanism will help China boost growth", 6/09/2016
It is understandable that a more free and mobile population from both regional and sectorial perspectives will be conducive to national economic growth.
It seems that local governments may also have a more immediate difficulty than purely demand side driven growth in granting guest workers the local resident status, that is, the expenditure needs associated with providing equal public services to them and their families, e.g. kids school education, or social security.
As a result, it should be a top priority for innovative ways to enable local governments the capacities to meet those service needs related to hukou reforms to grant local residence status. Different local government may have different levels of needs, so the central government may need to provide some funding to local governments.
Unless local governments have the financial capacities to fund the services that are required of them by those migrant workers, it would be very difficulty for them to carry out the required reforms to the hukou system to accept the migrant workers as local residents.