China's biggest cities have unveiled strict draft rules to regulate popular taxi-hailing services, sparking criticism that the proposed regulations will suffocate the booming industry and stifle innovation.
Beijing and Shanghai, for instance, would require all drivers for car-hailing services to be permanent residents while their vehicles must be locally registered – a threshold that would disqualify more than 90 per cent of the present pool of drivers. Chongqing and Hangzhou are set to impose similar rigid requirements.
Should the rules come into effect, they will curtail service providers like Didi Chuxing, which beat Uber out of China, and turn an internet-based business model into an old-school urban taxi operation subjected to excessive licensing requirements, analysts say.
"The rules try to regulate the car-hailing business as taxis, and show a tendency to protect local cab firms," said Wang Chenxi, a transport service analyst at Beijing-based research firm Analysys International. "This goes totally against the concept of the sharing economy."