The hukou system, or household registration system, and the Danwei (work unit) were put into place in China as a means of social control. This system required that every household, no matter how remote, was to register officially with local police stations. Registered households were then issued a booklet of residence, which was used to keep track of such things as changes in the household, personal records, job change, and relocation. The local police would keep track of all these records on everyone registered in the area.
Under this system, society was divided into two categories, red and black. Workers, soldiers, peasants, and cadres were labeled in the good category (red), while landowners, counterrevolutionaries, rightists, and criminals were placed in the bad (black). Those in the black category were treated poorly and victimized as enemies of the class. These two parties were used as a means of social control, to allocate resources, employment, career advancement, and other means of life. The party-state could thus control the people through attacking those individuals in the black category to quickly deter anyone attempting to rally against the state
Everyone in society belonged to some form of government controlled organization or work unit (Danwei). These organizations were controlled by the party-state framework. With such control over everything, the party-state integrated itself into every aspect of Chinese society.
It was not until post-Mao China, that the class division was abolished. The hukou system and the Danwei had become translucent as workers seeking work, migrated from rural communities to urbanized areas. As a result, China no longer has a strict organization of class, but rather a diversified class structure based on three resources: organizational, economic, and cultural. Organizational is the means to control political and administrative sources. Economics is simply the means of productions due to ownership, control, and management. Cultural refers to control and ownership of cultural or technological resources. So with a combination of these three resources an individual can attain different class standing within society ranging from “high class” to “low class.” As China continues to change to a more market-oriented system, the status of the individual changes with how much control over these three resources they hold.