The Ministry of Transport released draft rules on the management of online car-hailing services on Saturday. These are intended to properly regulate the booming sector, but are set to cast a shadow over the existing operations of major players such as the Chinese company Didi Kuaidi and its US rival Uber Technologies.

The rules require that the providers of car-hailing services insure the cars and passengers, and have labor contracts with the drivers; car-pooling and ride-sharing services offered by private drivers without a taxi license will be illegal.

In other words, private car-owners must register their vehicles as commercial taxis, which means their cars will be written off in eight years, regardless of their actual condition, if they become car-hailing service providers. The rules will hinder many private car owners from participating in the business given the short write-off period.