China’s plans to reform hukou, or the household registration system, could increase productivity and consumption within the economy, Matthews Asia has suggested.
A report by Andy Rothman of Matthews Asia found that “migrant workers make up roughly 70 per cent of all employees in manufacturing and processing” and predicted: “Ending the current hukou restrictions could result in higher productivity in manufacturing and construction by creating a better educated workforce”.
The report added that companies that have already switched to permanent worker contracts have seen output per worker rise by 27 per cent.
Adviser View
Darius McDermott, managing director of London-based Chelsea Financial Services, said: “Matthews Asia has made some strong predictions, but it should be remembered that the performance of the workforce will not change overnight, as a better educated workforce is something that will develop over a generation.
“An increase in spending and consumption is a viable step in encouraging growth in the economy. Further state reforms, including expansion of the healthcare system, will give people more security, and therefore more disposable income.”
