Boost for taxi sector reform

Hangzhou's plan to refund nearly 100 million yuan ($15.73 million) to taxi drivers is a welcome move to embrace Internet-based advanced technology that could help make this beautiful city in East China's Zhejiang province not only smart but also economically competitive. This is an example other local governments will do good to follow.

The rising popularity of taxi-hailing apps has added to the difficulties of taxi drivers in many Chinese cities. While cabbies still have to hand a handsome part of the money they earn to the companies they are registered with as taxi franchise fees and operation fees, the emergence of taxi-hailing apps has challenged the long-established taxi service cartel by giving passengers access to a larger pool of private vehicles.

To address their woes, local governments have to choose between the old policies governing the taxi service sector and swimming with tide to apply advanced Internet technology. To break the existing monopoly of taxi management companies and usher in market reforms, however, they have to go with the latter.