Tougher regulations of car-hailing services draw mixed responses in China

BEIJING - Regulators in major Chinese cities rolled out strict requirements for car-hailing services Saturday, causing nationwide repercussions and doubts over their sustained operation.

Transport authorities in Beijing, Shanghai, Guangzhou and Shenzhen, the four most developed cities in China, separately issued draft local regulations that featured a number of restrictions concerning drivers' hukou (household registration), car plates, vehicle model and age, and compulsory insurance.

"These measures are in fact limitations that forcibly raise entry barriers," China's largest online car-hailing platform Didi Chuxing said in a statement.

According to the regulations, Beijing and Shanghai, two cities with the most strict household registration system in China, require that drivers have a local hukou, meaning people from other cities will not be able to provide services in those cities.

All four cities demand that vehicles must be registered locally. However, car plates in Shanghai and Beijing are notoriously difficult to acquire. Potential car owners in Beijing often wait years before winning a license-plate lottery. Residents in Shanghai need to pay a large sum of money in a plate auction held once a month.

The regulations also substantially raise the threshold for vehicles allowed to provide such services, including the width of the wheelbase, engine size and vehicle age.

Didi Chuxing said such restrictions will result in the exclusion of large quantities of vehicles, except for higher-end cars that were far more expensive than most taxicabs.

The window periods for public comments, set by local transport authorities, were seven days and two weeks for Beijing and Shanghai respectively, short periods compared to usual practice.

Domestic high-end car-hailing platforms such as Shouqi and CAR, said the regulations would not affect their business but force the general market to upgrade.

Wei Dong, CEO of Shouqi, said the online car-hailing market in China still had huge potential, and the company would accelerate its expansion to other Chinese cities.

Zang Zhongtang, vice president of CAR, said the regulations would add costs to his company, but they were within expectations and totally manageable.

Didi Chuxing used more intense rhetoric and said that the proposed regulations could bring huge losses to its grassroots drivers, "affecting millions of families."

Passengers also showed mixed attitudes towards the regulations. Some white-collar workers in Beijing said they were afraid of the inconvenience due to a possible drop in vehicle numbers. However, some welcomed the new rules for the sake of safety and a better experience.

According to transport authorities in Beijing and Shanghai, the two most populous cities in China, with almost the combined population of the Republic of Korea, the requirements were aimed at controlling population size.

Beijing has long suffered from "urban diseases" such as traffic congestion and air pollution. Excluding "non-Beijing" drivers and vehicles will help to relieve an overburdened capital, the city's transport administration commission said.

The permanent population of Shanghai has seen a sharp growth in recent years, according to its transport administration commission, carrying huge implications for the city's limited resources.

As "exercising strict control over the population size of megacities" has been written into national resolutions, regulations that can contribute to the goal should be considered and followed, the authorities said.

China unveiled its first nationwide regulations for car-hailing services in July, granting legal status to car-hailing services. But for a long time, concerns over safety and market disorder surrounding the industry never ceased to appear in headlines.

"A detailed and strict regulation is necessary," said Guo Jifu, president of Beijing Transportation Research Center. "But such reforms should not stifle innovation. ... The reforms will be meaningless if we turn online car-hailing vehicles into another fleet of old-fashioned taxi cabs."