Hu Zhongping dreams that one day his young sons may go to university and escape his life of casual manual labour. The aspiration seems increasingly unrealistic. Right now, he would settle for them going to school. Chinese children are entitled to a state education, but not all of them get one. And the tens of millions born to migrant workers like Hu are among the most vulnerable, owing to a registration system that divides the country's citizens into rural and urban dwellers, and dictates their rights accordingly.

Critics are calling on the Chinese government to overhaul the hukou household registration system. They say it deprives millions of rural migrant workers of vital public services in cities, creating what has been described as China's apartheid. There has been much discussion at the National People's Congress this month about changing China's household registration system, called the hukou.

Foreign investment in south China is expected to fall 4.9 percent this year, with firms facing the challenge of labour shortages and rising wages, according to a survey by the region's American business chamber.

Huada Electrical Appliances has piles of orders from abroad -- a welcome sign that China's exports are bouncing back after the global economic crisis. But the television and computer components company has just one-fifth of the 300 people it needs to work the assembly line to fill those orders by the end of June. "Our hair is turning grey because of the anxiety," a company executive, who would only give her surname Wu, told AFP, explaining that the firm was recruiting everywhere -- on pavements, near food markets and with job agencies.

In the old days Guangdong migrant workers like Liu Xiaorong would have been treated as factory fodder, given the bare minimum in wages and easily replaced if they complained. The tables have turned with an acute labour shortage in the so-called "factory of the world" meaning workers like Liu now call the shots. Even the lure of three times the normal pay and perks such as air conditioning, basketball courts and television is not enough to get workers to sign up.

Buoyed by a wave of new orders, Chinese companies are scrambling to recruit manual laborers, as pressure mounts on the country's lawmakers to boost the rights of China's millions of migrant workers.

Western media coverage of China tends to be dominated by two competing narratives. The first is all about economics. China, it contends, is an epochal success story. The economy is booming and national wealth is on the rise. The Chinese themselves are overwhelmingly satisfied with their lot. There's nowhere to go but up. The second focuses on politics. China is in the grip of communist party dictatorship. People have no democratic rights. Everywhere you turn, there is social turmoil -- seething popular anger over corruption, environmental degradation, illegal land grabs, and summary arrests. Something's got to give. To be sure, both of these interpretations contain grains of truth. But it turns out that there's another way of comprehending the reality of modern-day China -- one that captures the contradictions of the place and allows them to co-exist.

Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage. As American workers struggle with near double-digit unemployment, unskilled factory workers here in China’s industrial heartland are being offered signing bonuses. Factory wages have risen as much as 20 percent in recent months.

Life for China's 130 million migrant workers has never been easy. In recent years, however, family life for the ‘liudong renkou' (floating population) was showing signs of improving until the financial crisis.

A decision by the province that is China’s second-biggest exporter to raise minimum wage rates has heightened expectations that other provinces and cities will soon follow, just as the central government’s attention is shifting from economic stimulus to rising inflation. Eastern Jiangsu province, which exports more than Brazil and South Africa combined, raised its monthly minimum wage rate 13 per cent to Rmb960 ($140) last week. It was the first time the rate had been adjusted in two years.