The ruling Chinese Communist Party is considering bringing some 13 million unregistered people back into the "hukou," or household registration system, citing "threats to social stability," official media reported.
The Ministry of Public Security in Beijing says the one percent of Chinese people who have been excluded from official records also lack access to fundamental social services, including education and healthcare.
Many of the unregistered were born outside of government family planning policies, known as the "one-child" policy, which Beijing recently amended to limit couples to two children.
Others were abandoned by their parents, born out of wedlock or lack the right documents, while many simply lack the money to pay official fines or bribes, rights activists and social commentators told RFA.
Beijing University of Science and Technology economics professor Hu Xingdou agreed that the time is right to solve the problem of the 13 million unregistered people in China.
"How can there still be people who don't have household registration in today's China?" Hu said. "It's not too late, and late is always better than never."
He said the hukou system is "fundamentally unreasonable."
"If someone isn't registered, it basically means they aren't recognized as a Chinese citizen," Hu said.
"The hukou system is a product of the Mao era, and it is inhumane in its very nature, and goes against the principles of a civilized society," he said.
He said only China, North Korea and Benin currently have household registration systems in place.
"Even the children of illegal immigrants in the United States can immediately gain U.S. citizenship," Hu said. "But Chinese people are in their own country ... and have been for generations."
"Children who have done nothing wrong and who happen to have breached ... family planning rules should be given a hukou, citizenship and full citizenship rights as a matter of course," he said. "If it can't achieve that, then the system is an anti-human one."
Source of revenue
Sichuan-based rights activist Huang Qi said the hukou system is also a major source of revenue for low-ranking government officials who are likely to continue extracting "fines" from unregistered people in spite of edicts from Beijing.
"They may have canceled the one-child policy, but there are still places where local officials use the fact that any bureaucratic process must start at the grassroots level: sometimes even the village chief has the power to initiate hukou applications," Huang said.
"Given the endemic nature of corruption in China, these officials use every bit of their power as a way of extracting money from the population," he said, adding that liberalizing the hukou system may not put an end to the problem.
"Some people can't afford these extortionate fees, so there will always be unregistered people in China," he said.
A Dong, a resident of Dongguan in the southern province of Guangdong, said his second child has never had a hukou and that he foresees further pressure from local officials to pay fines for the "excess birth" despite the change in the family planning policy.
"If you try to register [a second child], they make you sign a document admitting your guilt, that your child was an excess birth," A Dong, who gave only a nickname, said.
"Of course, they need to sort this out, because there are so many people without a hukou nowadays," he said.
"There will also be more pressure on people to get their child registered before the policy comes out, because if they do it afterwards, the government won't get its fine money," he said.
Guangdong-based family planning policy expert Xiao Yuhui said he believes the authorities in Beijing are considering the move in a bid to improve population statistics.
"If they enter those 13 million unregistered people onto the books, then that will actually make the population look less unbalanced," Xiao said. "The ageing of the population is an extremely serious problem right now."
He said the overturning of the one-child policy last month might take a long time to have an effect on population statistics.
"Only 20 percent of those eligible have applied for a second child since last year's [partial] reforms," Xiao said.
"But with administrative measures like not fining people any more, they can achieve the same policy goal," he added.
Unregistered people in China are excluded from social subsistence and healthcare reimbursement schemes.
Without legal documents, including the ubiquitous ID card, they are unable to travel far to look for work, as the purchase of tickets involves some form of ID, recent research has found.
Such differences contribute to social instability and inequality, according to China Daily.
The ministry on Saturday "declared its intention to help unregistered people obtain proper recognition," the paper said.
Reported by Yang Fan for RFA's Mandarin Service and Wen Yuqing for the Cantonese Service. Translated and written in English by Luisetta Mudie.