This bulging population poses a big problem for the city. To tackle it, authorities announced on April 1 that the city's 8-year-long system of Lanyin Hukou, or Blue-print Resident Certificate programme - a system for provincial migrants to get permanent residency in Shanghai - would be immediately abolished. The programme is called blue-print, as opposed to the local Shanghainese red-print resident certificate.

Local authorities hoped that ending the programme would help control the population problem. Permanent residency is set to rise to 13.36 million next year, compared with the current 13.27 million.

A way out

The Blue-print Resident system was first introduced in 1994, with an aim to drawing talented people and investment from outside the city limits. This residence programme allowed people migrating to the city the opportunity to enjoy the same privileges as locals. Migrants could apply for resident status if they meet certain standards, when investing, working or buying houses in the city.

But the permits have been sought after so much that the number of applications has put too much pressure on the city's infrastructure. Since 1999, the city's yearly quota of permits was expanded to 100,000; last year the quota was filled by the end of July. This year the numbers are climbing even faster.

"By mid-March of this year, over 7,000 permits were already granted," said Le Weizhong, of Shanghai Public Security Bureau in charge of residence administration.

So far, some 49,000 migrants have obtained legal resident status under the programme, including the most recent 7,000.

Police found that most of these new residents fulfill the requirements by purchasing apartments.

"Last year, statistics found that 88 per cent of these people chose to buy a house," Le explained. "Recently, the percentage jumped to around 96 per cent, and usually parents bought the house for their children."

Failed policy

The policy is considered a failure at drawing talent to the city. Among migrants with Blue-print Resident status in Pudong New Area, for example, local authorities found that only one-tenth had special skills.

Local authorities are setting the cut-off date at April 1 for non-locals to apply for resident status under the Blue-print Resident programme. Those who signed property contracts before April 1 may also follow the procedure to get the legal resident status.

While facing an increasing population of permanent residents, the city is also trying to attract global talent. Therefore, policy makers are facing a dilemma - how to maximize the percentage of skilled workers among new residents.

To solve the problem, a new policy called the Shanghai Residential Card is to be implemented within the year, taking the place of the Blue-print Resident system.

Early this February, the new system was mentioned by Mayor Chen Liangyu in his working paper at the yearly Municipal people's Congress, making the new policy a hot topic in the major Chinese-language newspapers.

Different from the Blue-print Resident policy, the system is not linked to residences, so it is being called a "green card" by some.

Domestic and overseas skilled workers can both apply for the card, as they do not change their residence or nationality.

These applicants should hold higher degrees or have special skills and have lived in the city for more than half a year, holding steady employment.

It is believed that the card will make the flow of talent more flexible. Sun Luyi, director of Shanghai Municipal Personnel Bureau, said such a flow is dynamic, not static, and should not be bound to one's record. He said that the flow of talent may contribute in various ways, such as moonlighting, projects and research labs.

While the practice of a quota system to draw talent to some extent affected the growth of certain industries, it also brought much trouble to non-local experts. Since social programmes are closely connected to one's resident status, non-locals experienced many problems in areas such as schooling of their children and health care.

"Yet, all these problems are to be solved by the new cards," Sun said. "Non-locals will be able to enjoy the same privileges as locals."

Real estate market

Although Blue-print Resident system did not help much to draw skilled labour, it did fuel the growth of the city's real estate market.

Shanghai Municipal Housing and Land Resources Administrative Bureau found that over the past three years, 64,800 new apartments have been sold to non-locals, accounting for 11 per cent of the total. Only last year, some 24,000 apartments in the city were sold to non-locals.

It is believed that these buyers contributed to the recovery of the real estate market in the late 1990s.

Therefore, some worry that abolishing the Blue-print Resident programme may have a negative impact on the real estate business.

Some companies admit that it will affect their business.

In a living quarter near Century Park by Shanghai Lianyang Group, 10 per cent of the new home buyers aimed to get the resident status for their children, in the hope of helping their children obtain a brighter future.

Shanghai Wanke Real Estate Development Company, found that 30 per cent of their clients were non-locals and they all had applied for resident status.

"It is hard to predict the loss currently," said a source surnamed Ding, from Ruihong Xincheng, another leading real estate company.

"Without the programme, more people will rent. After all, buying a house is an enormous investment for many families," he said.

Yet, the city's Municipal Housing and Land Resources Administrative Bureau is optimistic about the future market, and feels the implementation of the residential card system will still stimulate sales.

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