As economic expansion benefits China’s growing middle class, long stagnant fares are leaving Beijing’s 66,000 taxi drivers discontented. The Economist reports:

Beijing’s base fare of 10 yuan ($1.60) has not changed in a decade. Charges for travelling farther than the minimum fare were adjusted in 2006, from 1.6 to 2 yuan per kilometre. Since 2009 drivers have added a small fuel surcharge for longer rides. But whereas cabbies’ revenues have barely changed, average wages in the city have risen sharply, making the Beijing taxi a rare bargain. An analysis by Macquarie, an investment bank, found that a typical passenger has seen taxi costs fall by half since 2003, relative to average incomes.

[…]Petrol prices are set by the government and have risen twice since early February, most recently by 6% on March 20th, to 8.3 yuan per litre ($5 per gallon). The government has accepted that some fare adjustments may be needed but has given no timetable. For the moment, it is offering to give drivers a monthly subsidy of 300 yuan. Mr Zhang says he will gladly take it, but he calculates that petrol increases will cost him three times that amount. Macquarie calculates that it will take a fare increase of 20-30% to sort things out.

The sooner the better. In February disgruntled drivers were mumbling about a possible strike. Cabbies have gone on strike in other Chinese cities and indeed, in 2008, early in his tenure as party chief of Chongqing, Bo Xilai (recently sacked from that post) burnished his populist-socialist credentials by mediating with striking cabbies on live television.

The increasing affordability of taxis encourages Beijing residents to opt out of crowded public transportation, contributing to an overall shortage of cabs during rush hour and bad weather. While potential patrons are annoyed with a lack of vacancy, taxi drivers frustrated by low fares may maximize their profits by loading up with separate parties heading in the same direction, charging each the metered fare. Traffic authorities in the capital are suggesting that sharing rides could be a solution for a shortage of cabs, but the share should be negotiated by the customers, not the driver. From China Daily:

Beijing traffic authorities are encouraging residents to share taxis to overcome the shortage of cabs during rush hours.

“Regulations permit co-hiring a taxi when all passengers get in the car at the same place and head in the same direction,” Yao Kuo, director of the Beijing transportation law enforcement team, said.

“We hope taxi enterprises will try to offer such a service,” he said.

Yao warned that taxi drivers who refused to accept shared hiring would be penalized.

Zhang Changqing, a traffic law professor at Beijing Jiaotong University, welcomed taxi sharing as it would not only help relieve the city’s traffic congestion but also reduce exhaust emissions.

But he said authorities should regulate to differentiate between multiple hire arranged by the passengers and that arranged by taxi drivers intent on making a profit.

“Co-hiring a taxi should be encouraged with the passengers’ full willingness and knowledge of an arrangement. But some drivers randomly pick up passengers when there are already customers in the taxi and they finally charge all passengers the same fare in order to make more money, which is not legally permitted,” he said.

But residents and taxi drivers do not seem to share enthusiasm for co-hiring.[…]

Another recent China Daily article mentions a nationwide government subsidy intended to insulate taxi drivers from fuel price increases, and the response of drivers to the allowance:

Taxi drivers nationwide will receive a subsidy of around 300 yuan ($47.50) a month to offset the second hike in fuel prices this year, according to the National Development and Reform Commission.

The government on Tuesday raised gasoline and diesel prices by 600 yuan a ton. As a result, the retail price of mid-grade gasoline will increase by 6 percent and benchmark diesel by 7 percent.

On Feb 8, the NDRC increased gasoline and diesel prices by 300 yuan a ton.

[…]But many taxi drivers in the capital have called for an urgent adjustment to fares, saying the subsidy hardly makes up for the increased costs they will incur.

Jiang Mingsheng, a Beijing taxi driver, said the increase would cost him an extra 1,000 yuan a month.

“Although there would be a 300-yuan subsidy, it means that I would earn 700 yuan less than before,” he said. “If I want to make up that loss, I have to work more hours.”