The Competition and Regulation Issues of the Sharing Economy – An Analysis Based on China’s Ride-hailing Service Regulations

April 2017

CPI Asia Column edited by Vanessa Yanhua Zhang (Global Economics Group) present:

The Competition and Regulation Issues of the Sharing Economy – An Analysis Based on China’s Ride-hailing Service Regulations –By Wei Huang[1], Bei Yin[2] & Wen Zhou[3]

Introduction

In 2016, China’s Central Government released relevant administrative provisions to regulate online ride-hailing services, which provide that private cars registered with ride-hailing companies to provide online ride-hailing service are in their nature taxis, and thus require ride-hailing companies, drivers, as well as the cars to be licensed. In the course of promulgating detailed local implementation rules, a number of local governments imposed strict conditions upon ride-hailing companies, drivers and cars when granting the relevant licenses.

The provisions issued by the Central Government and those measures adopted by the local governments have triggered heated debates in China and overseas. A central issue is whether the requirements prescribed by the provisions and local implementation measures or rules (hereinafter referred to as “local implementation rules”) are over strict. There is even the voice to question whether the provisions and local implementation rules are reasonable and legitimate, pointing to the possibility that some local governments might have abused administrative power to implement local protectionism and/or, to artificially shield the taxi industry from ride-hailin