China is launching a state-owned ride-hailing platform — after lifting the 18-month ban on Didi

• According to a local media report, China will launch a state-owned transportation platform that includes ride-hailing and flight services.
• Qiangguo Jiaotong, which translates literally to “The Strong Country’s Transportation,” has completed internal testing and will soon launch its ride-hailing service for the public.
• Apparently the platform has consolidated the services of dozens of ride-hailing companies and is expected to eventually gain more than 90% of the ride-hailing market.

Ride-hailing giant Didi, poster child for Beijing’s years-long crackdown on tech companies, finally got approval to resume new user registration in China this week. While the move may make it seem like regulators are loosening the reins on the country’s beleaguered tech companies, a local media report on Wednesday suggests otherwise.

Apparently, China is planning to launch a state-owned transportation platform that would include ride-hailing and flight services, a move that suggests Beijing intends to keep a tight grip on the country’s tech sector. The platform Qiangguo Jiaotong, which translates literally to “The Strong Country’s Transportation,” has said to have completed internal testing and will soon launch its ride-hailing service for the public, Beijing Daily, the Chinese Communist Party’s mouthpiece, said.

Beijing Daily also noted in its report that the platform has consolidated the services of dozens of ride-hailing companies and is expected to eventually gain more than 90% of the ride-hailing market. Nikkei Asia in a separate report stated that the platform was jointly established by Xuexi Qiangguo, a web and mobile platform set up to disseminate President Xi Jinping’s philosophy, and the Ministry of Transport.

The platform, which some thought to be competition to Didi in China, will be integrated with WeChat, Alipay and Douyin, TikTok’s Chinese version, the newspaper said. Beijing Daily also noted that the state-owned platform was set up in response to the “disorderly expansion and data security problems” within the ride-hailing industry. The platform will first provide ride-hailing services to existing Xuexi Qiangguo users. 

It will also provide customized travel services for employees of key state-owned enterprises and institutions to “maximize the protection of user data security and personal privacy.” It is however still uncertain if the platform will consolidate the private apps in China such as Didi or if it will have its own ride-hailing services separately.

Didi was forced to pull its app from online stores and stop registering new users by regulators in July 2021, when investigators found its user data collection to be in “serious violation” of regulations. Didi was then hit with a US$1.2 billion fine, after the cyberspace authority in China found “conclusive evidence” that the company had committed violations including illegally storing drivers’ ID information in unsecured formats, and covertly analyzing passenger details.

“For more than a year, our company has cooperated with the government’s cybersecurity review, seriously dealt with the security issues found in the review, and carried out a comprehensive rectification,” Didi said in a statement posted on its Weibo account. After Didi was fined, the country’s transport ministry announced its intention to tighten the existing rules governing how online ride-hailing firms should handle and share their data with regulators. 

The new measures were essentially an update of the rules announced in 2018, this time giving the government more control over data collected by private companies. Among the renewed rulings, data generated by ride-hailing platforms can’t be used for commercial purposes and must be stored for at least two years in China, compared to six months previously. 

Without regulatory authorization, that data cannot be exported or shown to outside entities without regulatory authorization. The move by the transport ministry isn’t much of a surprise, given how China has been reigning its tech firms, especially when data comes into play.

 

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