The Hukou System in Shanghai: Benefits, Eligibility, and Application Process

Hukou (户口) is a system of household registration in China. Each citizen is issued a household register under supervision of the Ministry of Public Security, China’s police. Hukou serves as an identity proof for citizens, recording their basic information and permanent residence.

The hukou registration also determines access to housing, education, and medical treatment, among other social and welfare provisions. Each city in China administers its own hukou application process to control its resident population.

This is why the hukou is very important for residents in China, and highly-valued in first-tier cities like Beijing, Shanghai, and Guangzhou.

For example, in 2017, around 25 percent of non-Shanghai residents applied for a Shanghai hukou to access key services and enjoy more benefits in the city. Shanghai has about 14,456,500 residents, among whom 9,726,900 are non-Shanghai residents living and working there, according to the city’s Statistics Bureau.

It must be known that a hukou is different from a residence permit, which is a temporary document that can be used to apply for various socioeconomic benefits. In this way, it is similar to the hukou, but the access to benefits are comparatively limited and the permit needs to be renewed regularly.

Benefits of a Shanghai hukou

Some of the most important benefits that are attached to the hukou are listed below:

• Buying a house: Non-Shanghai residents cannot buy a house if they are single. In the case of married residents, they can buy a house providing they have made social insurance contributions in Shanghai for more than five years.
• Medical insurance: One’s spouse can enjoy medical insurance treatment even if they are non-Shanghai residents and haven’t joined the medical insurance scheme.
• Admission to public schools: Children can go to public schools without extra requirements. For non-Shanghai residents, admission of children to the city’s public schools usually requires the parents to have residence permits and to own a house nearby.
• Retirement and pension: For non-Shanghai residents, under the current system, pension payments will be made in the city where they have a registered hukou. As different cities maintain different pension standards, their monthly pension payment might be lower than that in Shanghai.

Applying for a Shanghai hukou

Shanghai’s municipal body has issued guidelines stating who can apply for a Shanghai hukou:

• Those possessing qualified talent, such as having established a startup, owning patents, founder of or senior management in a leading company;
• Those who earned at least a bachelor’s degree overseas;
• Those who have newly graduated from university;
• Those who are spouses/children/parents of Shanghai-hukou residents;

Those who hold a Shanghai residence permit and have contributed to social insurance in the city for at least seven years.

Given the high thresholds of certain channels, the most requests for a Shanghai hukou are made by Shanghai-based employees who have studied overseas and employees who hold a Shanghai resident permit for at least seven years.

Both types of applicants should submit their applications via their employer – these are likelier to get approved.

Shanghai-based employees who have studied overseas

Chinese youth returning home after graduating overseas generally favor job opportunities in Beijing and Shanghai, although there is increasing competition among other fast-growing cities.

In order to attract the best talent, the Shanghai Municipal Human Resources and Social Security Bureau recently issued the ‘Notice of Implementation of Employees Who Studied Overseas Apply for Shanghai Hukou’.

However, not every Shanghai-based employee who has studied overseas can obtain a Shanghai hukou; there are other qualifications required from both the employer and employee. The same goes for employees with residence permits, where working seniority matters.

Below, we highlight the requirements for these two popular categories of applicants.

Application requirements for Shanghai-based employees who have studied overseas are:

Employer qualification

• Registered in Shanghai; and
• Insert capital ≥ RMB 1,000,000 (US$146,025)

Employee qualification

• Bachelor/Master/Doctorate degree (different degrees will have different requirements of social insurance payment period and payment bases in Shanghai);
• First working city must be Shanghai after graduating from overseas;
• Accumulated unemployment months should not exceed two years after graduating from overseas;
• Labor contract period should be above one year and the application should be validated for more than six months before the labor contract expires; and
• Application is valid after probation period, if any.

Normally the Shanghai hukou is verified and approved in around 45 working days from the date of application if there are no problems.

Spouse and children can be transferred to a Shanghai hukou together with the employee-applicant under certain conditions. For the spouse, s/he is eligible only if they were married when living abroad. This is designed to close loopholes such as the use of fake marriages to get a hukou.

For children, their age must be younger than 16 years. In case the child has joined school late, the scope of consideration may be extended to completing high school – of which, indicative proof will need to be submitted.

Shanghai-based employees who hold a resident permit for at least seven years

Application requirements for Shanghai-based employees who hold a resident permit for at least seven years:

Employer qualification

• Registered in Shanghai

Employee qualification

• Holding a Shanghai residence permit card for at least seven years;
• Contributing to social insurance in Shanghai for at least seven years – during the period of holding the residence permit card;
• Compliant with Individual Income Tax obligations in Shanghai during this period;
• Applicant possesses an intermediate title or above in a certain technical area of specialization. (In China as elsewhere, persons need to take exams to earn titles, such as accountant, architect, or other technical positions. Upon passing such exam, they will be awarded a certificate.) When applying for a hukou, a person whose occupation is technical must hold a national certificate of vocational qualification of grade two or above to qualify; and,
• No record of violating the provisions of the state and city’s family planning policy, public security management, or punishment of the above illegal acts and other undesirable activities.

Additional conditions making it easier to apply for a Shanghai hukou

In addition, there are four conditions that will make it easier for employees holding a Shanghai residence permit card to apply for a Shanghai hukou:

• Those who have made significant contributions and are rewarded accordingly or occupy a technical post in an advanced level and above, or technicians possessing a national certificate of vocational qualification of grade one or above and employed in a position corresponding to the technical post. In the latter’s case, the condition of years of holding a resident permit card and social insurance contribution will be relaxed.
• Working in the education / healthcare fields and other posts in Shanghai suburban areas for at least five years. Here, the prerequisite of holding a residence permit card and social insurance contribution can be shortened to five years instead of seven.
• Participating in Shanghai social insurance contribution with a payment base of twice above of annual average monthly salary of the previous year, the condition of intermediate post or above, or technicians holding a National Certificate of vocational qualification of grade two or above.
• Accumulated Individual Income Tax payments of three consecutive years and minimum annual Individual Income Tax payment meeting the requirements of Shanghai standard, the condition of intermediate post or above, or technician holding a National Certificate of vocational qualification of grade two or above.

Shanghai hukou applicants meeting these four conditions would be verified and approved in around 45 working days since the date of application if there are no problems.

An additional step of “online publicity” is required for the candidates who have passed the verification and approval stages of registering their Shanghai hukou.

This is basically the Shanghai Municipal Human Resources and Social Security Bureau releasing the final Shanghai hukou to selected candidates – if there are no any objections after an online announcement of the same.