China's transport authorities have decided to step in to help the traditional taxi industry, under pressure from app-based car services.
The Ministry of Transport has just concluded soliciting public opinion in preparation for drafting a plan to improve taxi drivers' incomes while solving urban traffic problems.
Most of taxi cabs in Chinese cities are owned and managed by taxi management companies, with taxi drivers paying monthly franchise fees to the companies.
The emergence of taxi-hailing apps has challenged the current system, allowing customers to access a larger pool of private vehicles with better services and often lower prices.
Taxi drivers in several cities have protested that private vehicles have narrowed their already marginal profits, many quitting their taxi firms to join ride sharing apps.
Guo Jifu, head of Beijing Transport Development Research Center, said a large number of private vehicles joining ride sharing apps have made the capital's congestion problem even worse.
Wang Xiuchun, a taxi management official with the ministry, said the ministry hopes its upcoming changes will reduce taxi fees and improve drivers' income while making taxi cabs more attractive than private vehicles.
Zhang Xiaodong, vice chief of the road transportation administration in Hangzhou, capital of east China's Zhejiang Province, said the ministry's plan would use many measures already tried out in the city. Hangzhou decided in September to scrap the government's portion of management fees retroactively starting from the beginning of this year, an average reduction of 400 yuan (63 U.S. dollars) in fees for taxi drivers.
In total, the government will refund nearly 100 million yuan. Currently, taxi drivers in Hangzhou pay up to 8,000 yuan a month to register with one of the city's management companies.
The city will also allow taxi drivers to purchase and have full ownership and management rights of their vehicles, which previously belonged to companies and were rented by drivers.
The city will establish two state-owned companies to provide management services for individually-owned cabs.
China's taxi management system allows taxi firms to obtain taxi management franchises through a bidding process. Getting a franchise means they can levy exorbitant operation fees on drivers. The firms are blamed for low morale among cab drivers, resulting in poor service.