The changes in the rules governing residency permits, or hukou, represent a big step towards dismantling a system that for nearly 50 years has made, restricting the rural majority in free flow in some way.

Under the rules, rural residents will be allowed to apply for permanent residence in small cities and towns if they have jobs and home addresses, according to the scmp.com.

That freedom of movement will come amid the Government's push to accelerate urbanisation.

More than 840 million of China's 1.27 billion citizens live in rural areas, even though the agricultural economy is weak and burdened by an estimated 160 million surplus workers who cannot earn a better living only on family farms.

By permitting rural residents to move to cities, the Government hopes not only to relieve rural poverty, but also to ease social demands in poor rural areas. Urban residents generally have higher incomes and more access to social services.

The easing of the permit is also aimed at helping the economy by allowing firms to recruit skilled workers more freely, according to Zeng Xiangquan, dean of the School of Labor Relations and Human Resources at Renmin University of China in Beijing.

"Now that China is developing a market economy and is about to join the World Trade Organisation, it must make better use of its human resources, and to come up with a strategy of making good use of talented people." he said.

A so-called floating population of perhaps 100 million rural residents has migrated to cities in recent years. Many have been granted temporary residency permits, but they live without the rights and privileges of those with urban hukou.

(People's Daily 09/29/2001)