China has built its rapid ascent on the shoulders of its migrant workers, but higher costs are deterring rural Chinese from moving to cities, causing a looming labour shortage that is worrying top legislators.

Many of China's more than 220 million migrant workers already face tough conditions, unable to access healthcare or education for their children in the cities where they work, under the "hukou" or residence permit system.

Now, experts say the spiralling cost of living has made moving to China's cities a less attractive option for jobseekers than ever before, with serious implications for the country's already slowing economy.

The issue is expected to be high on the agenda when the country's top legislators meet next week for the annual session of the National People's Congress (NPC), or parliament.

Shi Yinhong, politics professor at Beijing's Renmin University, said it may include plans to address the plight of migrant workers, after a series of strikes and protests hit China's southern manufacturing heartland last year.

"The biggest challenge in China now is the social challenge -- balancing between rich and poor, rural and urban -- and the government at the NPC will be looking closely at this," Shi told AFP.

"I think the government will place emphasis on addressing this situation for migrant workers because they know it is important for them to come into urban areas as this produces economic growth."

China's State Council, or ruling cabinet, recently said it would reform the "hukou" system, making it easier for migrant workers to apply for residence permits in small and medium-sized cities.

Analysts believe more details may emerge with the release of Premier Wen Jiabao's work report, a blueprint for the country's development over the next year, to be released on Monday.

More than half China's migrant workers were born after 1980, and the new generation is both better educated and more demanding than the last.

An exports slowdown has forced many employers to cut wages and benefits, even as the cost of living has risen, with inflation hitting a three-year high of 6.5 percent last July before falling back.

Wages in China's urban areas are around 60 percent above those paid in the countryside, according to the government's latest five-year plan for employment.

But while rural wages are forecast to maintain an average growth of 13 percent a year during the next four years, many urban companies -- particularly small and medium-sized businesses -- are struggling to meet salary demands.

Rising prices are also affecting office workers -- Shi said students at his university were increasingly returning to their home towns after graduating, deterred from staying in Beijing by the high cost of living.

Ze Jianzhao, head of the Beijing-based Orient Talent recruitment agency, told AFP that businesses in cities were facing an uphill battle to recruit China's 6.8 million graduates.

"As living costs -- including food, accommodation and travel -- have recently increased in big cities such as Beijing, some people who had planned to find jobs in these cities have decided to leave," he said.

"This has also become a problem for companies who are recruiting there."

Wang Lei, a job-seeker from the eastern province of Anhui -- one of China's poorest areas -- told AFP he had found a sales job paying 3,000 yuan ($476) a month within days of arriving in Beijing.

But he continues to look for a job with a higher salary and better prospects.

"The bigger cities have more opportunities, and that is why I came to Beijing to look for work. But I have not found a job that is suitable for me yet," the 25-year-old said.

The problem is even more acute in China's mid-sized cities, where Yao Yuqun, professor of labour and human resources at Renmin University, said the government's planned reform of the hukou system was expected to focus.

"In cities of county-level or below, people with stable jobs and residences will be able to apply for permanent residence permits," Yao told AFP.

"The government has already issued the regulation in the state media, but I think the NPC will confirm this."