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China cracks down on taxi apps like Uber, banning unlicensed cars and drivers

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New nationwide regulations will affect local firms as well as Uber

Kevin Frayer/Getty Images

The Chinese government is introducing tighter regulations on taxi apps like Uber by banning their use of unlicensed cars and drivers. A statement released late on January 8th by the Ministry of Transport said: "Every limousine app company should abide by transport market rules, take their responsibilities seriously, and ban private cars from operating on their platform." Although no individual services were named, the new rules will affect US firm Uber as well as local incumbents Kuaidi Dache and Didi Dache. The ministry explained that "banning private cars from using the apps will put passengers at ease."

Authorities praised the "innovative" apps, but said their concern was for passenger safety

Chinese authorities are not attempting to kill the industry however, and took the time to praise the apps for their "innovative service model." They added that the companies involved "play a positive role in meeting the high-end and differentiated transportation market." State-run media outlet Xinhua added that the government "just wants to make the [taxi app] business develop in an orderly manner and in accordance with the law."

The announcement of this nationwide ban follows similar steps taken by local municipal authorities. Bloomberg reports that the cities of Shanghai, Nanjing, and Shenyang all introduced bans on unlicensed cars prior to this ruling, and that cities including these have seen local taxi firms organize protests against the apps. The situation appears to be similar to that in Europe and North America, where taxi drivers have complained that the use of unlicensed cars and drivers allows apps to undercut traditional services without offering comparable safety and oversight.

Uber says its "business is running as usual."

In a statement to the Associated Press, Uber said that its "business is running as usual" after the ban, adding that the company "respects the key role the government plays in ensuring that its citizens have access to safe, affordable and efficient transportation options." A spokesperson for Alibaba-backed rival Kuaidi Dache told the Financial Times earlier this week that it does not compete with regular taxis but "complements" them, offering a service "orientated towards the upper-end market." All three major taxi apps in China are currently backed by the country's internet giants: Uber by search engine Baidu; Kuaidi Dache by the Alibaba Group; and Didi Dache by internet conglomerate Tencent Holdings.