Can we have app-based and normal taxis both?

Of course, it is much easier to declare carpool services illegal and seize the cars in operation-as has been the case in some cities. But such a move would go against the Internet-Plus initiative put forward by the central leadership early this year. As an Internet-based business, car-sharing service deserves legal support as it can play a significant role in boosting the vitality of China's economy and promoting consumption.

Lawmakers, however, remain divided over the legal status of the business.

Some big cities like Beijing largely have license-based management in the conventional taxi sector. The numbers of taxis in such cities are highly regulated and it is technically very difficult to establish new taxi companies, leading to de facto monopoly in the sector. Besides, conventional taxi drivers have to pay a large percentage of their incomes to their companies as "portion money", which reduces their incomes, forcing them to work overtime to make ends meet. The rise of app-based car services, which are cheaper than taxis because of the heavy subsidies they enjoy for being Internet-based companies, has worsened taxi drivers' situation, which has prompted them to protest against the "unfair competition" from online service providers.

Policymakers have to listen to the voices of conventional taxi drivers and companies, too.

The challenge for policymakers is to strike the right balance between traditional and Internet-based car service providers, and it is a challenge they have to meet.

The authorities, for instance, could consider easing the strict control over taxi licenses and allow the market to decide how many taxis a city or town needs. If new companies are allowed to enter the sector, more competition could prompt conventional car companies to reduce the "portion money" they take from taxi drivers, which would raise the latter's incomes. Also, the entry of app-based companies into the market will lead to better services for passengers.

Policymakers, as a matter of principle, should not side with any interest group. They have to respect the market when it comes to allocation of resources and maintain the market order by strengthening regulation in fields such as passenger safety, service quality and building an even playing field for all competitors.

The author is a senior writer with China Daily. xinzhiming@chinadaily.com.cn