Great piece in The Economist about the hukou registration system that classifies all Chinese are either rural and urban--and only stealthily shall the two meet.
Current purpose is simple: keep rural folk from migrating to cities too fast. China is urbanizing at a rate never before seen in history. In fact, it's the single biggest migration in human history--by sheer size.
What the chart shows: Officially in Chongqing, roughly 24m people live in the countryside and maybe 9m live in the cities. But in truth, the cities hold more like 19m, meaning 10m rural folk have migrated there "illegally."
The system is sort of China's internal immigration process: the richer city folk holding off the poorer rural migrants who move in and take all the 3D jobs (dirty, dangerous, difficult). Like the US and its immigration issues, this system is failing to work as intended, hence the many calls for reform.
Classic rule-set clash: government wants to control the people flow, but the economic development says otherwise.