China regulators promise taxi industry shakeup after strikes

AP News
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Posted: Jan 15, 2015 5:06 AM

BEIJING (AP) — China's government promised Thursday to overhaul the country's taxi industry following strikes by drivers in at least seven major cities over complaints about low pay, high charges imposed by taxi companies and competition from ride-hailing apps.

The Ministry of Transport said it will take unspecified steps to improve pricing and "rights protection" mechanisms and to integrate ride-hailing apps and other new technologies into the industry.

Strikes have been reported this week in cities including Nanjing in the east, Chengdu in the west and Shenyang in the northeast.

In a sign of shifting official attitudes, the government's China News Service on Thursday cited experts who said taxi companies hurt drivers by charging up to 9,000 yuan ($1,450) per month for use of a cab. The report appeared on websites of numerous Chinese news outlets.

Drivers cited by Chinese media also complained about competition from private drivers who use ride-hailing apps such as Uber. The Ministry of Transport announced a ban last week on use of such apps by drivers without taxi licenses.

Taxi drivers have protested repeatedly in recent years over conditions in their industry. Most are treated as independent contractors without salary or other benefits. They have no bargaining power with taxi companies that decide their own charges for use of a cab.

"While cab drivers are undoubtedly unhappy about the use of taxi apps, their fundamental grievance is and always has been with the cab companies and the contract system," said Geoffrey Crothall of China Labour Bulletin, a Hong Kong-based research group, in a report this week.

After deducting charges to taxi companies, many drivers make less than a factory worker, according to Crothall.

"With earnings so low, drivers understandably get angry when their business is poached by unlicensed cabs that are not subject to the same burdensome regulations as they are," he said.

In other moves to put more money into drivers' pockets, the city government Beijing on Thursday canceled a 1 yuan (16 cent) surcharge imposed each time a taxi is refueled. The Ministry of Transportation said the eastern city of Wuhu province raised taxi fares by 1 yuan (16 cents) to 7 yuan ($1.15) for the first 2.5 kilometers (1.6 miles).

The Communist Party newspaper People's Daily warned on Jan. 6 that rising use of ride-hailing apps would force changes in the industry.

"The current monopoly has long been criticized," the newspaper said. "The large amount of money that must be handed to taxi companies will have to be gradually reduced."

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AP researchers Zhao Liang in Beijing and Fu Ting in Shanghai contributed.