Ride-sharing a possible solution to traffic woe

Passengers' insurance is also an obstacle to overcome.

The China Insurance Regulatory Commission said late last year that insurance companies would not cover accidents involving private cars that offer car-hailing services.

"The insurance premium for private cars is much lower than for taxis. If a private car is involved in a traffic accident when providing car-hiring or car-sharing services, the insurance company can refuse to pay the car owner," said Kan Xiaodong, an insurance expert.

Hope

Ride-sharing companies see a slimmer hope of gaining legitimacy and further growth after Chinese ministries vowed to encourage the popular means of transport recently.

A notice released by 10 ministerial-level departments including the National Development and Reform Commission on March 1 said China "encourages orderly development of online car booking and ride-sharing."

The move is part of the nation's drive to encourage green consumption and marks the first time the government has taken a clear, positive stance on ride-sharing in the form of legal documents.