Local regulations may restrict the growth of ride-hailing services

Ride-hailing services Didi Chuxing and Uber

AFTER ISSUING A REGULATION IN JULY which in principle confirmed the legality of ride-hailing service apps, the Ministry of Transport issued two other documents on Sept 9 that grant local governments the power to decide the total number and prices of ride-hailing services. But if local governments have too much power, they could intervene in the ride-hailing app market and thus curb its development, says an editorial in Southern Metropolis Daily:

The ministry's regulation made headlines and got nationwide applause in July because ride-hailing services, which had been operating for a few years, had been recognized as "legal" by the central government.

Only a few experts warned that the regulation granted local governments too much power that they could use to impose tight limits on the ride-hailing service providers. With several cities publishing their detailed local regulations, that warning is becoming a reality.

For example, the regulations of Lanzhou, capital of Northwestern China's Gansu province, and several other cities are full of limitations on ride-hailing services. Some say only residents with local hukou, or household registration, can apply for one, while some require all ride-haling cabs to be painted in uniform colors. These are ridiculous requirements.

People welcomed ride-hailing apps because the traditional taxi companies' management was rather bad. Traditional taxi drivers in a city have to pay a huge share of their incomes to a monopoly management company, which makes their services too expensive. And the management ignores the complaints against the poor services it provides. If ride-hailing services are made to follow the same mode, the industry will soon face the same problems.

The ride-hailing service app has proved a success in the domestic market. It has created hundreds of thousands of jobs, made life convenient for people and contributed to economic growth. The taxi companies are the only group to have suffered, because their monopoly is now under threat.

Since the monopoly companies may strike back with the help of local governments, the central leadership should take measures to help the ride-hailing services to grow as part of the market-oriented reform.