Brief update to Yuantongsi's post. You have to go to PSB to have your photo taken outside to the right of the front door. It costs 30rmb. You must use these photos on the application form. After that anyone can submit the documents. I have seen little change, so far, to make the residence permit easier or for longer time periods under the new rules and regulations in Yunnan. The same goes for the Foreign Experts permit. The work permit has more requirements with the criminal record check. Now if you invest $100 million USD in Yunnan in approved projects then no problem. We will keep working for improvements in the system.

I checked with a friend in Beijing today. It seems the rules here are also being applied in Beijing,,so it seems the Central government is indeed making it harder to get residence permits.