China has scrapped 18-year-old regulations governing taxi services, paving the way for the legalization of online ride-hailing services such as Uber.
In a move aimed at levelling the playing field between old and new business models, the Ministry of Housing and Urban-Rural Development and the Ministry of Public Security signed a document on March 16 that approved the scrapping of the previous regulation, which had been effective since 1998.
It’s not yet clear when the new rules, which are also expected to abolish the high franchise fees paid by taxi drivers to their companies, will be released.
Any change will be closely watched as many cities around the world, including Hong Kong, are debating on how best to regulate the emergence of online ride-hailing services.
“As a new invention, online ride-hailing services have been a good experience for consumers, and welcomed by some passengers. So our solution is to provide a legal way” forward for the industry, Yang said.
How authorities address the grievances of taxi drivers over high franchise fees will be a key issue, as the past few years have seen them striking and protesting in a dozen mainland cities.
Liu Xiaoming, a senior transport official, said last week that after the overhaul only those companies that provided good services would get their licenses renewed.
Low wages and increasing competition from car-hailing services such as Uber and Didi Chuxing have prompted taxi drivers in many mainland cities – including Wuhan, Shenzhen, Chengdu, Shenyang and Nanjing – to protest.
Liu said nine cities had already removed taxi franchise fees amid efforts to reform the industry.
“The aim is to provide a fair competition environment for both taxi and new private car-hiring services,” he said, adding that licensing restrictions on taxi firms would be for local governments to decide.
The transport ministry released draft regulations to solicit public opinions last year. These included provisions that online car-hiring firms would be licensed, have prices guided by government or decided by market forces, and would be required to set up servers on the mainland.