China bans private cars from taxi-hailing market

A customer checks his smartphone app that eases finding a taxi. [Ding Ding / China Daily]

China's Ministry of Transport forbade private cars from taking passengers for profit using taxi-hailing apps after local authorities cracked down on unlicensed drivers using apps as camouflage.

The ministry has ordered app developers to rule out private cars from their platforms to ensure that all vehicles are owned by taxi or car rental companies out of concern for passenger safety.

Under Chinese law, a private car owner can not take passengers for profit, however, some vehicles offered on the basis of taxi-hailing apps are owned by drivers.

The Shanghai government detained 12 drivers using taxi-hailing business via Didi Dache, one of the most popular apps, and fined each driver 10,000 yuan ($1,630) in December. Beijing authorities have also started to get tough with unlicensed drivers.

The action against unlicensed drivers has not been without public discontent as the vested interests -- taxi companies -- are untouched.

The ministry said it recognized the luxury car pick-up services, which it described as innovative model and blurring the boundary between taxis and car rental business.

The ministry encourages innovation and just wants to make the business develop in an orderly manner and in accordance with the law. It will continue to investigate and survey the new business.