HANGZHOU - As far as land grabs go, it was quiet and secret -- and the perpetrators almost got away with it.
Almost 200 Chinese city government officials stealthily changed their identities on the administrative computer system and immediately became eligible for a countryside housing plot of up to 144 square meters.
The civil servants had taken advantage of China's long established hukou -- or household registration -- system, which identifies everyone as a "rural" or "urban" resident depending on their place of birth.
A group of local farmers blew the whistle on the fraud in a series of letters to the organization department of the Communist Party Committee of Yiwu city, east China's Zhejiang Province, at the beginning of the year.
News of the scandal soon broke and caused an outcry among both rural and urban dwellers.
"It's theft," said rural resident He Guofeng. "The civil servants changed their registration status to get plots of land that are supposed to be allocated to farmers."
Fellow countryside resident Yang Huiyi branded it "immoral." "The civil servants already enjoy better social security and now they want to take from the farmers."
Sensing rising public discontent, the city government nullified the household registration changes of 195 officials.
Living off the land
Long considered by rural folk the key to a better life, an urban hukou comes with an array of benefits, covering healthcare, social security and education, that are unavailable or less accessible to farming families.
The lure of better prospects for themselves and their children has seen generations of rural Chinese striving to obtain a hard-won urban hukou.
But the Yiwu revelations indicated that the human tide from China's countryside to cities may be slowing -- and in some cases ebbing.
The central government adopted the hukou system in 1951 to restrict and regulate the movement of people by tying everyone to their place of birth.
Though the overwhelming majority of Chinese still prefer an urban hukou, many people in wealthier cities such as Yiwu, the seat of China's largest small-commodity distribution center, see a rural hukou as an asset.
The Yiwu officials had found a rural hukou came with an allocation of land and compensation for land requisitions, said a local official who refused to be identified.
Each rural family under the city administration is entitled to a housing plot ranging from 108 to 144 square meters, under Yiwu's Regulation of Implementation of New Rural Housing Construction, issued in 2006.
Sale of the rural homes is still prohibited, but the owners can make substantial amounts of money by renting them out in a market where home prices are rocketing.
"I rent my house for 2,000 yuan ($293.85) a month, " says an Internet cafe owner in rural Yiwu. "A house on 108 square meters can bring more than 50,000 yuan a year, almost equal to the yearly income of a civil servant."
Rural intrusion
The city is undergoing an unprecedented expansion, which means the local government is acquiring evermore rural land for construction.
"A rural resident can earn tens of thousands of yuan from the requisition of land, and the compensation is likely to rise," says a city official who refused to be named.
Wang Huizhong, director of the Zhejiang Provincial Public Security Department, says the change of the residence status of the civil servants from urban to rural was an "intrusion" into the benefits of the farmers.
The amount of the compensation for land requisition in each village is fixed and evenly distributed to each resident as a dividend under the joint-stock system of the rural collective economy.
More rural residents means less money allocated to each person, says Wang.
"Obviously, the actions of the civil servants infringed on the rights of the farmers, which could lead to social unrest if our government just stands by and watches this trend grow," Wang says.
Increasingly rural migrants are unwilling to change their hukou from rural to urban even when they qualify after years of working in cities.
Only 189,000 rural migrants gave up their rural hukou last year in Zhejiang, down 67 percent from the 577,000 who changed in 2004. By contrast, the number of rural residents migrating to cities to work rose from 2.04 million in 2004 to 3.06 million last year.
But the high costs of living and falling incomes in Chinese cities is also driving city residents to seek rural hukou.
Zhao Wenqi quit Hangzhou, where he lived for 40 years, and moved to a town to the north.
"I sold my small house in downtown Hangzhou and bought a big house in the rural area," says Zhou. "Life in a small town is so much cheaper."
Pan Changsheng, 40, a migrant worker in Wenzhou City, is considering going home to the countryside.
"The incomes of many migrant workers are far below those of rural residents," Pan says. "More and more migrant workers are going home to do business."
Fraud migrants
Gu Yikang, an expert on rural issues at Zhejiang University, says the demand for rural hukou indicates the possible slowing of the pace of urbanization to the detriment of the wider economy.
Less than 46 percent of China's population lives in cities compared with more than 90 percent on average in the developed world.
Gu says the level of urbanization is an important benchmark for an economy transforming from poverty to middle income, as a growing urban population means more construction and more jobs.
The government needs to raise urban living standards, says Gu. "We must strive to increase the incomes of the city residents, cut unemployment, improve basic infrastructure and construct more affordable homes."
However, Tong Ruihui, of the provincial agriculture department, says hukou fraud is the root cause of emigration from cities.
The hukou system segregated the rural and the urban populations, initially in geographical terms, but more fundamentally, in social, economic and political terms, he says.
It is high time for China to cut the link between allocation of land and hukou, Tong says. "Only by stripping social security from household registration can we ensure migration is in accordance with market rules and maintain a healthy economic development."
