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Uber Is Now Officially Legal in China

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It is no secret that Uber has been having a lot of problems in China. In some cities, the app has been banned, its offices invaded and its practices investigated, while all the while taxi companies rail against the ride-sharing service. A large part of the company’s problem, though, has been that China’s laws didn’t exactly make Uber and its rival Didi Chuxing legal.

However, that had now changed as China has formally legalized online car-hailing services in a set that Didi Chuxing called “the world’s first nationwide online ride-booking regulations.”

Now, it is likely that these services could expand greatly, as the new rules not only allow ride-sharing apps but in a way show support for them, which has generally been China’s attitude. While other countries were banning Uber and ride-hailing apps, China has tried to co-opt the technology to promote even more economic growth.

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Didi Chuxing predicted one year ago that the Chinese ride-hailing industry would be worth $50 billion annually by the end of the decade.

Unfortunately, there is a catch to this celebration: some of the wording in the regulations could lead to local persecution of ride-sharing apps. For example, the rules allow ride-hailing platforms to set market-determined prices on their own. However, there is one phrase which could ruin it: “with certain exceptions.”

Huang Shaoqing, a professor of applied economics at Shanghai Jiaotong University, commented to the Financial Times that, “In practice, a local government could use this language to set prices for online cars higher than municipal taxis.”

Despite this, though, the rules are a vast improvement over a draft set of rules issued last year, which would have prohibited prices lower than municipal taxis while forcing drivers to obtain individual commercial vehicle licenses, which would have required that their cars be scrapped every 8 years. These rules would have made the apps extremely unattractive both to drivers and passengers.

Didi Chuxing, in a statement, simply hoped that local governments wouldn’t abuse this room for interpretation.

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News Source: The Financial Times