Forcing out-of-towners off the road in China
FRESH from school with a degree in hotel management, Luo Haichao left his hometown and moved to Beijing to look for a bigger paycheck. He eventually found one in a different sector: driving cars. China has created its own local versions of Uber and Lyft, and the ridehailing business is booming.
But now Luo – and potentially tens of thousands of other drivers – will have to get off the road.
Citing safety and other issues, the cities of Beijing and Shanghai said on Wednesday that Chinese ride-hailing companies must stop using out-of-town drivers like Luo and hire only local residents to sit behind the wheel.
“It makes me feel sad,” said Luo, 29, who works for the ride-hailing companies Didi Chuxing and Yidao Yongche and had just spent about $36,000 on a new Volkswagen Passat to give his passengers a more reliable ride. “Without people who come from the outside, Beijing wouldn’t have developed so fast.”
The new rules could deal a significant blow to Didi Chuxing, China’s ride-hailing giant, and smaller rivals that must now find new – and probably more expensive – drivers in two major markets. Didi Chuxing had just defeated Uber in an expensive battle for dominance in the world’s largest ride-hailing market, and it enjoys such a high global profile that it counts Apple and other big names among its investors.
In a statement, Didi said the rules represented a “significant step toward a more sensible and liberal framework”, and were less limiting on pricing, cars and driver restrictions than earlier drafts. A spokeswoman declined to comment on how the Beijing and Shanghai residency requirements for drivers would affect it.
China’s technology boom has put the country on the innovation map and transformed the lives of many of its nearly 1.4 billion people. But even the new parts of the Chinese economy depend in part on the same old fuel that powered the country’s rise for decades: cheap labour from the countryside.
Those workers – totalling nearly 280 million, including Luo – leave their farms, villages and smaller cities to seek factory jobs and better lives in the big cities.
“At the bottom of the conflict is tension between powerful vested interests and a new rising class,” said Hu Xingdou, a professor at the Beijing Institute of Technology. The political power of China’s taxi services – which see ride-hailing companies as dangerous rivals – presents a particularly strong challenge, he said.