Emerging from the Central Economic Work Conference Dec. 5-6 in Beijing, chaired by Chinese President Hu Jintao, was the conclusion that modifying China's "hukou" system — which controls the residential movement of people within the country — is a key to genuine economic reform. According to China's Xinhua press, the conferees recommended revising the hukou system to allow eligible migrant workers to settle and work in urban areas and easing up on residential restrictions for small and medium-sized towns and cities to promote urbanization and domestic consumption. Discussing hukou reform in China is not new, but the topic has taken on added importance during the global economic crisis. One of the main goals of China's stimulus program is to increase domestic consumption. The government has known for some time that its domestic consumption — approximately 40 percent of gross domestic product (GDP) — was lagging behind average global rates of 60-70 percent of GDP in wealthy countries and 50-60 percent in other Asian countries with high savings rates like China. But the economic crisis and the impact of changing consumption patterns in the United States has highlighted China's need to rebalance its economy and increase domestic consumption to a higher percentage of GDP, thereby dampening its reliance on export growth. One important step in rebalancing China's economy is to increase urbanization and the higher levels of consumption that go along with it, for such products and services as food, shelter and transportation. In Hu's discussion of hukou reform at the economic conference, there was a noticeable change from past government statements on the issue. The focus now appears to be on shifting migration patterns to small and medium-sized towns and cities rather than the large coastal metropolises that are the biggest migrant destinations. The hukou system, initiated under Mao Zedong in 1958, allowed the central government to control the population by limiting and controlling migration. The system was designed, in effect, to keep rural peasants tied to the land. After Deng Xiaoping's economic reforms in 1978, hukou restrictions were relaxed and China's population of migrants, also called the "floating population," is now believed to be as high as 200 million. After Deng's reforms, which opened China's economy to foreign trade and investment, particularly along the more accessible coast where trade infrastructure already existed, migrants began being lured to big coastal cities by the greater job availability and higher incomes. These migrant workers helped to further expand the coastal infrastructure, and the result was a widening economic gap between the developed coastal areas and the interior hinterlands. Hukou reform has been discussed and carried out in China since the 1980s, and throughout this period local governments in large migrant-populated cities have added their own tweaks to the system. The provincial government in Guangdong, one of the country's most prosperous provinces, announced a plan Dec. 8 that rewards points to migrant workers in Guangdong for education, investment (e.g., buying a house) and length of stay in the province that would enable them to transfer their current hukou to a city in Guangdong. The plan also would allow the children of migrant workers to attend schools with their urban neighbors without having to pay exorbitant fees and would grant migrants workers access to social security, pensions and healthcare, which are generally not available to those without a hukou in a Guangdong. The main problem, of course, is that the people most able to gain points are those who are educated, ambitious and have money. These are not the demographic characteristics of your typical Chinese migrant worker, who comes from a poor family, has a high school education at best and is expected to make a living as soon as possible. Indeed, Guangdong's plan is similar to past hukou reforms in that it encourages permanent migration but only for a select few. Other reforms that have been implemented dismiss the hukou distinction between agricultural and non-agricultural households but do not change workers' residency status — they remain registered as residents of their birth places. This effectively limits where they can move and settle without transferring their hukou (which is no easy task). For any new reforms to be effective they must allow migrants to officially change their residency or provide a better balance of social services in rural and urban areas. In any case, hukou reform in China, as necessary as it may be, will not be quick or uniform across the country. Beijing will start slowly and implement the reforms in piecemeal fashion, focusing on certain areas to ensure that the government can regain control if the experiment results in any challenge to central authority.