A customer checks his smartphone app that eases finding a taxi in October, 2015. [Photo/China Daily]

A regulation, jointly issued by several ministries on Thursday, legalized car-hailing service providers and put forward some fundamental principles for their management. Local governments should now issue detailed regulations for the industry, said Beijing News:

By issuing the regulation, the central government has taken a giant step toward improving and regulating the online car-hailing industry.

Yet the principles of the new regulation must now be fleshed out by local governments, which must draft detailed regulations. That's why the new regulation will come into effect on Nov 1, not now.

The new regulation has left space for local governments to properly regulate the new car-hailing industry. For example, the price of car-hailing rides should be decided by the market, but the local governments have the power to issue a standard when they consider it necessary; and they have the power to decide whether to issue permits.

As a result, the prosperity of the new car-hailing industry will be largely determined by the detailed regulations implemented by local governments. Whether they can strictly follow the "market-oriented" principle will decide whether the new industry will flourish or decline.

Given the popularity of car-hailing services, local governments should ensure the threshold is not too high and simplify their administrative procedures.

The central regulation said local governments could regulate the price of rides if necessary, but a market price system is obviously better. Car-hailing apps are a product of market competition and government setting prices might hurt the market.

To sum up, the central government has expressed it accepts the car-hailing industry and we expect local governments to do so, too.