In June, Deng Lingyu turned down the chance of obtaining hukou in Fuzhou, the capital of his native Fujian province, to take a job with a Shanghai law firm because the 27-year-old law graduate felt it would allow him to learn from a better group of attorneys.

"In my second week, I was assigned to draft a legal document in English under the guidance of my mentor, an experienced lawyer. I don't think I would have had such a chance in a smaller city," said Deng, who studied at East China University of Political Science and Law in Shanghai.

At present, he does not qualify for permanent residence in Shanghai, and his parents have tried to convince him to work in Fuzhou and move his there from his home city.

"They think it's a serious issue, but I don't worry about it much," he said. "Without hukou, I can still enjoy many social resources. At this point in my career gaining experience is the most important thing. I can always leave if I'm not happy."

Zhu Qing, director of the student career guidance center at the University of International Business and Economics in Beijing, said hukou has clearly begun to lose its appeal among new graduates.

A recent survey conducted by the center showed that only 18 percent of respondents regarded hukou as the top consideration when looking for a job.

Graduates will not stay in a city just for hukou because career development and job opportunities are the top two overriding factors, Zhu said. He estimates that about 80 percent of his university's graduates find jobs in Beijing, Shanghai, Guangzhou or Shenzhen (both in Guangdong province), but up to 65 percent stay in Beijing.

The survey also indicated that 67 percent of students pay close attention to talent incentives, and 52 percent would be willing to work in their hometowns if suitable opportunities arose.

"The incentives attract their attention because working in one's hometown is much better than being in an unfamiliar city," Zhu said, adding that it's important for local governments to know what graduates really need when they are choosing a city to work in.

However, a new problem - "empty hukou" - has arisen as cities have lowered their requirements. "We found that many graduates who work in Beijing without hukou often register in smaller cities nearby. As a result, what those cities have attracted is just a batch of hukou registrations, not real talent," he said.

A government researcher, who did not want to be identified because of the sensitivity of the topic, said some local governments may have an ulterior motive for attracting talent and use the campaigns to boost the real estate market.