The Necessity Of China's Household Registration System Reform And The Supporting Financial Reform

China's existing household registration system was formed at the early founding of PRC. Then the country's economy was at the start, and the financial strength was very weak. As a result, the country took the household registration system adapted to the planned economic system, which restricts the free migration of the population in order to relieve the crisis of city shortage of resources. At that specific time, restrictive household registration system played some positive role. It met the requirement of planned economy, and was helpful for the unified management and control of the central government, for the allocation of production material and labor, and for the coordination of the overall economy of China.After the reform and opening up, as China practices the marketing economy, which requires the reasonable and efficient allocation of production material and resources, the restrictive household registration system became more and more outdated. The restriction causes directly or indirectly the lag of China's process of urbanization and the slowdown of rural economic development; meanwhile, it greatly hinders the reasonable allocation of labor and human resource. For these reasons, reforming the existing household registration system has become an urgent requirement.After describing the adverse effects of the existing household registration system, the article raises the opinion that in order to reform the system, the most important is to remove the various social welfare attached behind the system, e.g. the unfairness in education, employment and social welfare; give back the original function to the system, which is the population registration and management function, other than a hidden welfare allocation system. In order to strip the welfare attached to the system, it is necessary to take the supporting financial reform, including the national financial system reform and local financial reform. Finally, the article puts forward some proposals on the direction of the supporting financial reform and the principle of the household registration system reform.