Authorities in Shanghai have announced that the ongoing "Sharp Edge 2026" campaign targeting the ride-hailing industry is entering its fourth phase. While continuing to penalize drivers and platforms for violations under existing ride-hailing regulations, the campaign will now leverage the "Work Safety Law of the People's Republic of China" and the "Shanghai Work Safety Regulations" to impose stricter punishments for major safety hazards, such as the operation of "ghost cars." Platforms and their responsible safety managers implicated in such cases will face significantly heavier penalties.
In a recent incident that exemplifies the "ghost car" problem, a passenger arriving at Shanghai Hongqiao Airport attempted to book a ride through the Tencent Mobility platform. The booking was assigned to a white Tesla vehicle registered under the CAOCAO INC platform. However, the vehicle that arrived was a grey BYD with a completely different license plate. The driver claimed the Tesla was in an accident. Shortly after departure, the driver repeatedly demanded an off-platform cash payment. Upon refusal, the driver allegedly threatened the passenger, who then exited the vehicle. The driver did not cancel the trip, forcing the passenger to cancel it themselves, return to the airport, and use the platform's emergency alert function.
Following the report, Shanghai's transport law enforcement and public security authorities swiftly intervened to investigate. CAOCAO INC has since apologized to the passenger and provided compensation of 500 yuan. The driver involved now faces a potential administrative penalty of a 10,000 yuan fine and a three-month driver's license suspension. Authorities have also identified the driver and vehicle's registration across multiple platforms, ordering the immediate removal of such non-compliant entities.
According to current ride-hailing rules, CAOCAO INC faces a fine of up to 30,000 yuan for allegedly dispatching ride requests to unqualified drivers and vehicles. Furthermore, under work safety regulations, the mismatch between the registered and actual driver/vehicle is now classified as a major work safety hazard. This classification could lead to additional fines of up to 100,000 yuan for the company and its responsible personnel.
The fourth phase of the "Sharp Edge 2026" campaign, running from May 11 to August 31, will enhance on-road inspections and multi-departmental supervision. Platforms showing inadequate compliance improvements will face intensified scrutiny and penalties under work safety laws. The campaign also aims to strengthen source governance by targeting illegal practices in the vehicle leasing sector to prevent unqualified vehicles and drivers from entering the operational market.
Since its launch in October 2025, the campaign has progressed through several phases. By the end of the third phase, authorities had investigated 2,592 ride-hailing violation cases and traced 923 cases back to platforms, including 44 illegal vehicle leasing cases tackled jointly with police. Over 15,700 non-compliant vehicles were identified for removal from platforms. Traffic police reported over 266,000 traffic violations by ride-hailing vehicles, temporarily suspending the licenses of 979 drivers involved in illegal passenger transport. They also removed nearly 20,000 uninsured and over 4,000 uninspected vehicles from service. During background checks on over 53,000 individuals, more than 3,600 were disqualified. Police have transferred 147 leads on suspected "ghost car" operations to transport enforcement and identified 23 potential fraud cases for criminal investigation.
To reinforce platform accountability, transport authorities are collaborating with public security, market regulation, and human resources departments to conduct joint inspections of major platforms. These inspections focus on operational standards, safety management, regulatory compliance, and driver rights protection, pushing platforms to fulfill their management duties and address systemic shortcomings.
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