In China, there's no freedom of movement, even between country and city

A man walks past a billboard in Beijing. Image: Getty.

In recent years, China has gained a global reputation for its juggernaut economy and breathtaking social change. Yet beneath this shining veneer, an outdated Maoist institution continues to define the life chances of Chinese citizens: it’s called “hukou”.

Hukou is a kind of passport system, which limits access to public services, based on the birthplace of the holder. It was first established in 1954 to immobilise China’s large rural population, as China’s Chairman Mao Zedong sought to contain any possible challenges to the Chinese Communist Party’s (CCP) new autocratic regime. The result was a highly segregated society.

Having an urban hukou allowed citizens to enjoy privileged access to public services such as education, health, housing and pensions. Meanwhile, citizens with a rural hukou were more or less deprived of access to the country’s limited welfare system, and unable to move freely to China’s more affluent urban centres along the east coast.

Rush to the city

After Mao died in 1976, realities on the ground gradually began to change. Young Chinese people who had been sent to the countryside during the Cultural Revolution (from 1966 to 1976) were returning to the cities. Throughout the 1980s and early 1990s, China’s economy picked up steam, drawing millions of rural migrants into urban industrial clusters to become low-wage labourers.

Rural dwellers were attracted by the new job opportunities, which promised an escape from abject poverty in China’s countryside. But migrating from the countryside to the city came with its own challenges. While it provided a pathway for social upward mobility, rural migrants routinely experienced discrimination at the hands of Chinese city-dwellers. Rural migrants mostly carried out dirty, dangerous and demeaning jobs, which urbanites were not willing to do.

Walking away. Image: Renato @ Mainland China/Flickr/creative commons.

To make matters worse, the strict hukou system made it almost impossible for rural migrants to bring their families with them to the city. As a result, China’s countryside is now populated primarily by elderly people, women and children. In fact, it’s estimated that more than 61m children have been left behind in China’s villages, to be looked after by older siblings or grandparents. Many suffer from psychological problems caused by the long-term separation from their parents.

The CCP has been mindful of these challenges, and has introduced economic policies – such as Building a New Socialist Countryside – to improve infrastructure and economic development in rural China. But these investments have neither stemmed the flow of rural-urban migration, nor addressed the core issue of increasing social inequality.

The road to reform

In recent years, the CCP has announced piecemeal reforms to the hukou system, to try to allow some of the 236m migrants living away from home to acquire an urban hukou and gain extra entitlements. A number of municipalities have introduced an Australian-style, points-based system, which means applicants who meet certain criteria become eligible for urban hukou.

The government has encouraged cities to relax their criteria, but requirements for first-tier cities such as Beijing and Shanghai remain far more onerous than those for second and third-tier cities in other parts of China. What’s more, additional caps on rural migrants means that in practice, only a fraction of those who are eligible are actually granted urban hukou.

Hukou reforms are also complicated by the fact that land reform has made little progress in China. Rural Chinese are wary of giving up their rural hukou, which entitles them to a small plot of land. Such land use rights provide a limited safety net for rural Chinese – particularly those who do not enjoy the benefits of an urban pension.

Tough choice: rural hukou (left) and Beijing temporary residence permit (right). Image: Rolex Dela Pena/EPA.

In China, the distinction between citizens with rural or urban hukou is increasingly seen as arbitrary. In 2008, some Chinese citizens called on the CCP to abolish the system in its entirety. Signatories of Charter 08 – a progressive manifesto for the future of China – said that an alternative system should be established, which “gives every citizen the same constitutional rights and the same freedom to choose where to live”.

So far, the CCP has ignored calls to abolish the hukou system. Some authors of Charter 08 have even been imprisoned. Meaningful reform of the hukou system will require the party to be more open to bottom-up, civil society initiatives and policy advice, to level the playing field for both rural and urban Chinese citizens.The Conversation

Andreas Fulda is assistant professor in the School of Politics & International Relations/Faculty of Social Sciences at the University of Nottingham.

This article was originally published on The Conversation. Read the original article.


 

 
 
 
 

The ATM is 50. Here’s how a hole in the wall changed the world

The olden days. Image Lloyds Banking Group Archives & Museum.

Next time you withdraw money from a hole in the wall, consider singing a rendition of happy birthday. For today, the Automated Teller Machine (or ATM) celebrates its half century.

Fifty years ago, the first cash machine was put to work at the Enfield branch of Barclays Bank in London. Two days later, a Swedish device known as the Bankomat was in operation in Uppsala. And a couple of weeks after that, another one built by Chubb and Smith Industries was inaugurated in London by Westminster Bank (today part of RBS Group).

These events fired the starting gun for today’s self-service banking culture – long before the widespread acceptance of debit and credit cards. The success of the cash machine enabled people to make impromptu purchases, spend more money on weekend and evening leisure, and demand banking services when and where they wanted them. The infrastructure, systems and knowledge they spawned also enabled bankers to offer their customers point of sale terminals, and telephone and internet banking.

There was substantial media attention when these “robot cashiers” were launched. Banks promised their customers that the cash machine would liberate them from the shackles of business hours and banking at a single branch. But customers had to learn how to use – and remember – a PIN, perform a self-service transaction and trust a machine with their money.

People take these things for granted today, but when cash machines first appeared many had never before been in contact with advanced electronics.

And the system was far from perfect. Despite widespread demand, only bank customers considered to have “better credit” were offered the service. The early machines were also clunky, heavy (and dangerous) to move, insecure, unreliable, and seldom conveniently located.

Indeed, unlike today’s machines, the first ATMs could do only one thing: dispense a fixed amount of cash when activated by a paper token or bespoke plastic card issued to customers at retail branches during business hours. Once used, tokens would be stored by the machine so that branch staff could retrieve them and debit the appropriate accounts. The plastic cards, meanwhile, would have to be sent back to the customer by post. Needless to say, it took banks and technology companies years to agree common standards and finally deliver on their promise of 24/7 access to cash.

The globalisation effect

Estimates by RBR London concur with my research, suggesting that by 1970, there were still fewer than 1,500 of the machines around the world, concentrated in Europe, North America and Japan. But there were 40,000 by 1980 and a million by 2000.

A number of factors made this ATM explosion possible. First, sharing locations created more transaction volume at individual ATMs. This gave incentives for small and medium-sized financial institutions to invest in this technology. At one point, for instance, there were some 200 shared ATM networks in the US and 80 shared networks in Japan.

They also became more popular once banks digitised their records, allowing the machines to perform a host of other tasks, such as bank transfers, balance requests and bill payments. Over the last five decades, a huge number of people have made the shift away from the cash economy and into the banking system. Consequently, ATMs became a key way of avoiding congestion at branches.

ATM design began to accommodate people with visual and mobility disabilities, too. And in recent decades, many countries have allowed non-bank companies, known as Independent ATM Deployers (IAD) to operate machines. The IAD were key to populating non-bank locations such as corner shops, petrol stations and casinos.

Indeed, while a large bank in the UK might own 4,000 devices and one in the US as many as 12,000, Cardtronics, the largest IAD, manages a fleet of 230,000 ATMs in 11 countries.


Bank to the future

The ATM has remained a relevant and convenient self-service channel for the last half century – and its history is one of invention and re-invention, evolution rather than revolution.

Self-service banking and ATMs continue to evolve. Instead of PIN authentication, some ATMS now use “tap and go” contactless payment technology using bank cards and mobile phones. Meanwhile, ATMs in Poland and Japan have used biometric recognition, which can identify a customer’s iris, fingerprint or voice, for some time, while banks in other countries are considering them.

So it’s a good time to consider what the history of cash dispensers can teach us. The ATM was not the result of a eureka moment of a single middle-aged man in a bath or garage, but from active collaboration between various groups of bankers and engineers to solve the significant challenges of a changing world. It took two decades for the ATM to mature and gain widespread, worldwide acceptance, but today there are 3.5m ATMs with another 500,000 expected by 2020.

Research I am currently undertaking suggests that ATMs may have reached saturation point in some Western countries. However, research by the ATM Industry Association suggests there is strong demand for them in China, India and the Middle East. In fact, while in the West people tend to use them for three self-service functions (cash withdrawal, balance enquiries, and purchasing mobile phone airtime), Chinese customers consumers regularly use them for as many as 100 different tasks.

Taken for granted?

Interestingly, people in most urban areas around the world tend to interact with the same five ATMs. But they shouldn’t be taken for granted. In many countries in Africa, Asia and South America, they offer services to millions of people otherwise excluded from the banking sector.

In most developed counties, meanwhile, the retail branch and the ATM are the only two channels over which financial institutions have 100 per cent control. This is important when you need to verify the authenticity of your customer. Banks do not control the make and model of their customers’ smart phones, tablets or personal computers, which are vulnerable to hacking and fraud. While ATMs are targeted by thieves, mass cybernetic attacks on them have yet to materialise.

The ConversationI am often asked whether the advent of a cashless, digital economy heralds the end of the ATM. My response is that while the world might do away with cash and call ATMs something else, the revolution of automated self-service banking that began 50 years ago is here to stay.

Bernardo Batiz-Lazo is professor of business history and bank management at Bangor University.

This article was originally published on The Conversation. Read the original article.