Thousands of shared bikes laid to rest in the south-eastern Chinese city of Xiamen, Fujian Province. (PHOTO: CFP)

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Bike sharing is an innovation that combines the technologies of the internet, big data and artificial intelligence. The management of shared bikes should emphasize their advantages, like a low carbon footprint and convenience while eliminating the disadvantages.

The report of the 19th National Congress of the Communist Party of China proposed the further integration of the internet, big data and artificial intelligence with the real economy as well as fostering new growth areas and drivers of growth in innovation-driven development, green carbon economy, the sharing economy, and other areas.

The central government’s report provides new ideas about internet-based innovative industries. Shared bicycles are now everywhere on city streets. But they also pose challenges to city governance even as they resolve transportation problems in cities.

Bike sharing plays a positive role in promoting cycling as an alternative to driving cars in cities. However, the flood of bicycles into cities has led to disorder, creating road hazards as well as problems in terms of capital supervision and unregulated parking. All these issues test the governance capacity of municipal governments.

Bike sharing is a new phenomenon without existing experience in terms of management and regulation. In August 2017, the Ministry of Transport and nine other ministries released a guiding opinion on regulating bike sharing.

Now, Beijing, Shanghai and Guangzhou have issued orders prohibiting companies from putting more bicycles on the road. The management and regulation of shared bicycles are problems facing local governments, and here are some suggestions.

 

Entry and exit mechanisms
We should establish a legislative mechanism to regulate the entry and exit of bike-sharing companies. Currently, many bike-sharing enterprises are clustered in major cities and the quality of these services is closely related to the safety and order of roads and transportation. Nevertheless, many cities have no entry criteria for these enterprises. There is no category for bike sharing in the registration of enterprises.

The registration categories are made according to the standards for classifying national economic sectors formulated by the Chinese National Bureau of Statistics, in which there are no categories and items for bike sharing. Bike sharing can only be roughly categorized as “internet technology.”

Moreover, the quantity of bicycles is not controlled precisely. Many enterprises do not report to the government the number of bicycles delivered onto the road.

In order for management, enterprises should report to the local department of transportation administration about the number of bicycles they intend to deliver to the road. And then the department should decide the number based on big data analysis of parking space, population, transportation structure and other factors within a region.

For instance, the Shanghai government has formulated standards for quality of bicycles and services of bicycle enterprises in cooperation with the bicycle industry association.

In terms of the exit mechanism, the following principles should be implemented. The first is that technological indicators for safety of shared bicycles should be made, and bicycles should be recycled for maintenance once they are damaged or broken.

The second is that the government should selectively examine bicycle companies and evaluates their services. The problem is that, now according to regulation, the department of industry and commerce are in charge of products in circulation. But shared bicycles are directly put into use without circulation. Therefore, there are no institutions with the authority to examine the quality of bicycles.

The third is that mandatory scrapping should be implemented for bicycles that have been in use for a certain time period. Also, companies that fail to fulfill the requirements for entry should be eliminated from the market. Dynamic administration of the exit mechanism can ensure quality of service in the industry.

 

Capital supervision
The government should supervise the capital of bike-sharing companies. Most companies require users to pay a deposit before renting bicycles. One bicycle can be contracted with more than one user. Therefore, deposits multiply while costs remain constant.

According to the data released in May by the Ministry of Industry and Information Technology, the market size of bike-sharing companies in 2017 is estimated to be 10.28 billion RMB and users total 209 million.

If the large quantity of capital generated by the industry is controlled by companies, will there be a disguised form of financing? And also what if these companies declare bankruptcy, which will result in a break in the capital chain?

For example, in summer 2017, when a number of cities implemented measure to control the amount of shared bicycles, many began to withdraw their deposits from some companies. After failing to return all the deposits, many companies suffered a crisis of credibility or were forced to exit from the market.

The government should supervise the deposits of bike-sharing companies through designated administrative bodies. Difficulties in capital supervision should be solved through legislation. For instance, the Shanghai government released a pilot guiding opinion putting the Shanghai branch of the People’s Bank of China in charge of capital supervision of enterprises. However, many bike-sharing companies registered their headquarters in Beijing and operated in other places through branch offices. They only opened bank accounts in Beijing, so local banks could not effectively supervise their bank of deposit.

 

Parking problems
The government should control the number of shared bicycles and solve the problem of parking through city planning. In 2012, the State Council issued a policy to guide the construction of bike lanes, public parking lots and other supporting facilities to “build a motorized system in cities dominated by public transportation and at the same time improve the conditions for walking and riding.”

However, because city planning in the past did not anticipate the emergence of shared bicycles so it didn’t reserve enough space for parking. Now bicycles have become the major means for traveling to bus stations, subway stations and shopping malls. The problem of bicycles occupying the road is becoming severe.

Limited parking space in cities and the increasing number of bicycles create a new contradiction in city planning. Hence, the number of bicycles delivered onto the road should be communicated to the government. Especially in city centers, city planning reserves little space for parking, and the influx of bicycles inevitably further complicates the problem. In order to promote cycling as an alternative form of transportation, municipal officials should consider increasing parking places for non-motor vehicles.

As of April 2017, there were 17,481 parking lots for non-motor vehicles in the center of Shanghai. But due to ineffective management of shared bicycle parking by companies, random parking still occurs in many places. Local governments should implement rational city planning, and companies should also invest both manpower and material resources to solve the problem of disorderly parking.

In addition, judicial authority should strengthen judicial protection for bike sharing. A good order should be fostered by rules. The judicial sector should protect public properties from being damaged. Measures can include: increasing the punishments for stealing or damaging shared bicycles, and publicizing regulations through typical cases; and establishing a blacklist of people who violate regulations by means of the internet, big data and through information sharing among companies.

Bike sharing is one beneficial attempt to implement a sharing economy. It nevertheless poses challenges for the government in terms of safety, capital supervision, orderly parking and legal use. It is necessary to build a social governance model characterized by joint construction, joint governance and sharing to realize green transportation and foster the benign interaction of the internet, big data and artificial intelligence with the real economy.

 

Chen Bangda is from the Center for Rule of Law Strategy Studies at East China University of Political Science and Law.