Privatization: worth a shot?
Although local governments are paying fuel subsidies to help taxi drivers deal with higher costs, the company-driver system is still putting the squeeze on drivers.
According to the 21st Century Business Herald, the Beijing municipal government paid 400 million yuan ($62 million) in fuel subsidies for cab drivers in 2010. Cab drivers in Beijing are supposed to receive the monthly subsidies from both the municipal government and the company they work for, but many taxi drivers said they had only received money from their companies, according to a report in China Daily.
The government subsidy is paid to the company, which should pass it on to the drivers, according to the Beijing Municipal Commission of Transport.
Still, a cab driver interviewed in the report said the company had raised its monthly rental fee by the same amount as the subsidies.
Industry experts have criticized taxi companies for the wide disparity between company profits and driver wages.
In developed countries like Great Britain and Japan, cab drivers are much more flexible than their Chinese counterparts – they only pay a small rental fee to their companies, Li Jingsheng noted.
To most experts, the solution to the taxi industry's problems is simple: a free market.
According to Li, taxi companies charge high rental or management fees without providing efficient management. Cab drivers should be released from such a system, he added.
Li's line was backed in China Youth Daily, which published a report stating that taxi companies, which operate as mediums between drivers and consumers, are totally unnecessary. Instead, cab drivers should be allowed to register at some management authority and operate on their own.
However, such reform would face obstacles, as interests groups, such as taxi companies, would be reluctant to give up their share.
According to a CCTV report in 2006, the number of unlicensed cabs in Beijing totaled 72,000, exceeding the number of legal ones. Beijing Police soon launched a crackdown to tackle the problem, but with little effect.
"There are two types of cab drivers, licensed and unlicensed," Li said. "It is plausible for private car owners to become cab drivers during rush hour; it is reciprocal."
China Daily quoted You, a member of the Transition Social & Economic Institute, in a report published in June, as saying, "Of course there will be obstacles when it comes to reform, and great resistance from interest groups and beneficiaries of the monopoly is inevitable. However, if we do not start to change as early as possible, then we will be on our way to the abyss."
