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Chinese cities warn of the oversupply of taxi drivers in a weak labor market

Municipal governments across China are trying to discourage their unemployed citizens from becoming taxi drivers, even though the low barrier to entry is attractive amid a weak labor market.

The latest warning came from Jingdezhen, a city known as the porcelain center in the southeastern province of Jiangxi. The city’s transportation authority said Monday that “the number of private cars in the city has increased over the years and the capacity of the online ride-hailing market is becoming saturated.”

“Enter the online ride-hailing industry with caution,” the authority said in a message on its official WeChat account, adding that a local driver earns an average of 240 yuan (US$33.2) per day for 15 rides, from which commission fees and taxes must be deducted . In comparison, the average daily disposable income in Jingdezhen was 135 yuan in 2023.

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There have been similar warnings from at least five other cities since April. Last week, Putian in southeastern Fujian province and Shangqiu in central Henan province both said the number of cars was “reaching saturation.”

At the end of April, Shangqiu, a city in Henan with a population of 7.7 million, had more than 1,100 drivers actively waiting for online ride orders. “The number of cars and drivers is growing rapidly,” the local transportation agency said.

Suzhou in eastern Jiangsu province, Chongqing municipality and Yingtan city in Jiangxi province made similar announcements last month.

Suzhou said more than 57,600 cars in the downtown area had registered for rides by the end of March, an increase of 3,466 from a quarter earlier. “[The supply] of the industry is growing,” the report said.

Chongqing said less than 60 percent of the 118,000 registered cars went out for rides in the first quarter. “Given the current volume of orders, it is in fact difficult to have all cars involved in the operation of taxi services. Vehicle capacity has far exceeded actual demand,” the report said.

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Signage at the Didi Global offices in Hangzhou, China, August 2, 2022. Photo: Bloomberg alt=Signage at the Didi Global offices in Hangzhou, China, August 2, 2022. Photo: Bloomberg>

Driving has become a popular part-time job for many laid-off workers in China because it only requires a car and a driver’s license. The weak labor market has contributed to oversupply in the taxi sector.

According to the Chinese Ministry of Transport, China had almost 6.6 million registered online taxi drivers at the end of 2023, almost 30 percent more than a year earlier. In contrast, the number of ride-hailing passengers grew by only 20.7 percent to 528 million over the same period, according to the China Internet Network Information Center.

Concerns about market saturation came at the same time as a major personnel change at market leader Didi Chuxing. On Sunday, the company announced that Jean Liu would step down as president and director. She would retain her role as Chief People Officer, while also being named a “permanent partner” of the company.

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This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice covering China and Asia for more than a century. For more SCMP stories, explore the SCMP app or visit the SCMP Facebook page Tweet Pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.

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