Even after all these years I keep finding it unbelievable how fast urbanization takes place in China. In the 1950s the Chinese government adapted the system of household registration, a system of permanent residency, the 户口 hukou. It tied all Chinese people to a certain location in the country. At this appointed location they where were entitled to housing, food, school for the children, and all the necessities in life. After the opening up in 1978 everything changed. People started to move around and to migrate from one location to another. This resulted in fast urbanization and the so-called 'shadow population' (people actually living in a city while having their hukou in another location) in each city.
Today the hukou still exists but it has become a kind of a burden. Changes and relaxation in the hukou system took place over the years. In many cities people could get a working permit. Since January 2008 some provinces abolished the difference between a rural and an urban hukou. These days the rule is loosening again: companies are now allowed to hire graduates without hukou. This enables these graduates to move around more freely to look for a job. You can read more about the 户籍改革 reform of the hukou system in the 世界商业报道 World Business Report.