Lack of national law

The Ministry of Transport said on Thursday that a reform plan for the taxi sector has been drafted and is open for public opinion.

There currently is no national law that applies to the taxi sector, but only local government and ministry regulations. All taxi permits and licenses are issued by local governments, who strictly control the number of taxis.

The Chinese taxi business is a specialized sector and strictly regulated in that companies must obtain permits to be taxi business operators; cars must have taxi licenses; and drivers must pass a test to qualify.

Drivers using Uber and similar platforms seldom have those qualifications.

Wang said there are not enough taxis to meet demand, and that leads to the operation of unregistered private cars.

Beijing had about 66,000 registered taxis last year, in a city with 17 million residents. The city expanded its taxi fleet for the first time in 12 years in January.

Shanghai had about 50,000 taxis in 2014, for 25 million residents.

Wang said, "When the amount of permits and licenses are far less than the practitioners who like to provide taxi services, the market loses control and vitality."

Local media said a new taxi driver in Shanghai could spend more than 50,000 yuan to buy a license to enter the business.

However, any car owner can join a ride-sharing platform free of charge by simply signing up and uploading their profile and document pictures.

Many former taxi drivers are among the early birds in the industry.

An Uber driver said he could make thousands of yuan each month, after tax, far more than he could earn working for a taxi company.

He views himself as a freelancer. "I take orders when I feel like working, or do something I need to do for my family, or just stay at home when I'm not happy.

"The car is mine. I pay only for what I need, instead of paying maintenance fees."