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Illustrations: Peter C. Espina/GT



This Friday marked the first anniversary of China legalizing online car-hailing services nationwide. Despite the hubbub, which is still going on in the rest of the world, the Chinese government became the first country in the world that adopted such an assertive and forward-looking policy, a token of its openness to and embrace of new technologies and business models.

However, things have gone a bit awry with the inspiring general guideline to support the development of the online car-hailing and ride-sharing industry being misrepresented by local governments.

One year on, in most cities that have promulgated their own regulations, the soaring industry's momentum is being stemmed, especially in metropolises like Beijing, Shanghai and Shenzhen. City regulators have framed a whole set of rules raising the bar of admittance to make sure the impact of the new industry won't harm traditional business models.

For example, in Beijing if a driver wants to enter the business, under the strict regulations he has to own a vehicle whose wheelbase is longer than 2.65 meters and engine displacement is higher than 1.8 liters, basically equal to a middle- or high-end car worth more than 150,000 yuan ($22,168). In addition, his car has to be registered in Beijing, where car plates are as precious as gold, and he has to be a Beijing citizen who has a household registration in the city.

Beijing is among the toughest metropolises in terms of the admittance requirements, but second-tier cities are not as relaxed as you would expect. Traffic authorities of some cities have even come up with a new exam for online car-hailing drivers, who are required to speak English, know every major hotel, resort and some obscure history of the city.

The side effects of these local policies are tremendously discouraging. Complaints about the increasing difficulty of hailing a car either on the street or through an app are rising. The situation has also significantly contributed to the rise - or should we say resurrection - of illegal cars for hire, run by those who cannot meet the strict standards and are therefore deprived of doing the business legally in cities like Beijing. Security concerns arise, and people's convenience has been compromised.

A question has emerged - when is it time to review a controversial policy that is against the popular will?

It is, without doubt, necessary for the government to regulate new frontiers. And it is a common approach for the government to be alarmed and then relaxed in front of new situations. For example, Singapore introduced tight regulations over the emerging industry, but gradually cut back many rules. Now to be an online car-hailing driver in Singapore is pretty easy - besides the basic requirements for driving experience, health and criminal records, you don't even have to be a Singaporean citizen.

Of course taking care of a city-state's transportation issues is much easier than regulating a big country as complicated as China.

Real progress is always made in a spiraling way. For example, the dominance of WeChat, which greatly weakens traditional SMS and call services, was built on back-and-forth negotiations between Tencent, government authorities and telecommunication companies. Finally a "break-even point" was found, and every party is happy with the new dynamics.

From the central government's guidelines to experts' studies, the sharing economy, represented and probably kicked off by car-sharing, is a driving force for a transformation of China's social structure, including the way people interact with each other and the concept of ownership. Innovations from the sharing economy are expected to solve traffic jams, car pollution and a shortage of space in cities. The innovations also serve as an impetus for China's technological development, especially into areas like the use of big data. These benefits can only be achieved if the government takes a long view and continuously reviews its policies for the sake of a greater good.

The author is a freelance writer and an observer of the Internet economy based in Beijing. wendao424@hotmail.com