Yang Guang's rise from a village farmer to an Audi-driving businessman with two properties hinged largely on one of the most coveted documents in China: an urban hukou, or residency permit.

The 45-year-old who lives in the central city of Zhengzhou likens the permit — which typically ties a person's access to health, education, loans and other services to their birthplace — to a "cattle ear-tag the state clipped us with."

"It uses this tag to sort us into different categories of people entitled to different sets of privileges and subjected to different obligations," he said.