Hukou: a passport for your own country
Household registration, and migrants without rights in the cities they build.
What happened
The 1958 household-registration (hukou) system tied schooling, healthcare and welfare to the place you were registered, and made moving a matter of permission — in effect an internal passport dividing the population into rural and urban castes at birth. It has been loosened repeatedly since the 1980s, but nearly 300 million internal migrant workers still labour in cities where their children often cannot attend state schools on the same terms as registered residents.
The results
A vast, semi-permanent underclass of migrant workers builds and staffs the cities it is not allowed fully to belong to — the geographer Kam Wing Chan has likened the divide it created to a system of institutionalised, hereditary discrimination. Freedom of movement is the quietest freedom, and the one that makes the others enforceable; hukou removed it by statute.
Why it happened
Hukou exists to control labour and population at the state's convenience: to keep the countryside supplying cheap workers without granting them the claims of citizens. The purpose is administrative control dressed as social order. A system that needs permission slips to let people move has decided that people are an input to be allocated, not citizens to be served.