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Economy

China's second-tier cities lure young workers with generous perks

Incentives aimed at shoring up local labor forces as country shows its age

The city of Wuhan aims to have 1 million university students settle in the municipality in five years.

BEIJING -- As China continues to age, cities around the country are vying to lure young people to fend off a future labor shortage, using incentives such as easy household registration and subsidized housing.

In 2017, the number of newborns dropped to 17.2 million, while the percentage of population aged 60 or older grew 0.6% to 17.3%. This is causing cities to worry, as municipal budgets will suffer if tax revenues shrink.

Dang Zhimin, a 21-year-old university student in Xian, a city in the north-central province of Shaanxi, obtained the coveted household registration -- which grants holders health care, pension and other benefits -- from the city a week after he applied. Nor did it take much effort: He just sent the city a photograph of his ID and university enrollment certificate via a messaging app.

Xian offers household registration to any university student or graduate up to the age of 35. Professor Zhang Zhongfeng of Xian International Studies University said that about half of the school's students born outside Xian are thinking about obtaining the registration.

Since the program started in March 2017, the city has added about half a million people to its household registry. This compares to the 290,000 people it added over the preceding five years.

A Chinese resident shows his household register. Second-tier cities in China are making it easier to obtain the document to lure younger workers.   © Getty Images

Meanwhile, the city of Wuhan in neighboring Hubei Province began incentive programs last year. The city has a large number of university students, who typically leave after graduation. Wuhan wants them to stay, and now subsidizes housing for people who find jobs or launch businesses in the city within three years of graduating.

Qualified residents in a high-rise apartment close to the city center receive 20% off their rent of 2,200 yuan ($340) courtesy of the local government, which also pays management fees for the first year -- a saving of 2,000 yuan.

Graduates from one of the city's own universities are also eligible for a 20% discount on the purchase of a condominium.

Similar to Xian, Wuhan makes it easy to obtain household registration, offering it to university graduates aged up to 35 who find employment or start a business in the city. Wuhan also encourages businesses to prioritize local graduates when hiring.

Zhang Yixiu, 20, a university student from a different city, praised Wuhan's initiatives. He said that he plans to remain in the city after graduation to start his own company.

Yang Liu, 29, also lauds the new policies, especially after they helped her reunite with friends who moved to Wuhan from Shanghai and Shenzhen, attracted by the relaxed household registration policy.

Life in Beijing, Shanghai and Shenzhen, where rents and home prices are high, can be a slog, so much so that Beijing and Shanghai saw their populations decrease at the end of 2017. Xian, Wuhan and more than 20 other second-tier cities hope to capitalize on the exodus of educated workers from these major urban areas to shore up their own aging workforces.

The cities also hope that the incentives will ultimately give property markets a boost. When the city of Tianjin announced in May it would relax requirements for household registration, it was flooded with applications from across the country.

Tianjin is home to many prestigious universities but real estate investment has slumped recently, dragging regional growth for the January-March period to 1.9%, the lowest for any municipality. A city official, however, expressed optimism that an influx of people would boost the city's real estate market.

For many Chinese cities, the real estate industry has become key to supporting tax revenues, employment and economic growth. In Xian, property prices shot up after the city rolled out its incentives, while a boom in apartment building construction continues in Wuhan.

An executive of an investment fund said luring young workers is a convenient way for municipalities to help liquidate local condominium inventory and align local policies with those of the central government.

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