The chief of transport authority on Monday criticized subsidies car-hailing applications are offering to their users, pledging to better regulate for-profit rides by private cars.
Yang Chuantang, head of the Transport Ministry, said giving subsidies is a “short-term move” and imposes “unfair competition” on traditional taxi business.
“The purpose (of giving subsidy) is to attract more passengers and to gain a bigger market share.
The apps are profit-driven and will not give out subsidies forever,” said Yang.
Didi Kuaidi, backed by Internet giants including Alibaba Group Holding Ltd and Tencent Holdings Ltd, is in fierce fight against Uber Technologies Inc in the country.
Uber CEO Travis Kalanick said earlier this year the company lost more than $1 billion in China last year. Most of the losses were due to subsidies offered to drivers and passengers.
Didi Kuaidi and Uber apps are also facing regulatory dilemma in the country. Current industry regulations do not allow private cars to carry out for-profit rides.
Yang said a set of new rules have to be in place to suit the growth of online car-hailing and other emerging services.
The Transport Ministry pledged to “vigorously press ahead” reforms in taxi industry and to foster new driving force and speed up the development of new economy.
It also said China will rely on public transportation services to ease traffic jams in big cities.