China’s Revealing Spin on the ‘Sharing Economy’

CreditIllustration by Andrew Rae

For decades after its Communist revolution in 1949, China was known as “the kingdom of bicycles.” The one-speed Flying Pigeons that swarmed the streets were not simply a cheap mode of transportation. They were symbols of a shared aspiration. Along with a radio, a watch and a sewing machine, a bicycle was one of four possessions — known as sanzhuan yixiang, or “three rounds and sound” — that urban Chinese families felt they needed to be part of the modern world. By the time I joined the masses in 2001, cycling across Beijing for daily Mandarin classes, cars had begun to displace bicycles. Pedaling alongside my fellow commuters — students, workers, pensioners — I felt part of a communal experience that might soon be gone forever.

I was wrong, of course. China’s cities are suddenly teeming with bicycles, and the humble one-speed, that remnant of China’s collective memory, again serves as more than just a means of conveyance. It is now a digital device too, helping shape one of China’s most dynamic growth engines — the so-called sharing economy. Three years ago, bike-sharing didn’t exist in China. Today more than 40 companies offer the service. And the top two alone, Mobike and Ofo, handle more than 50 million rides every day, solving the “last mile” problem of getting people from public transportation to their homes.

China’s bike-sharing explosion is driven by digital innovations that make renting “dockless” bikes easy, cheap and completely cool. All it takes is a smartphone: to find the nearest bike via GPS, to scan its QR code and open its smartlocks and to pay a minuscule fee (usually 15 cents or less per ride) through a mobile-payment app. At the end, the bikes can be left almost anywhere. (In the United States, bicycles often need to be picked up and returned to a fixed dock, as with New York’s Citi Bike.) For a generation of consumers conditioned to adapt to new things, the draw is no longer the pride of ownership but has become convenience and cachet. For the companies and, more pointedly, the Chinese government, the potential windfall comes not so much from profits, which remain elusive, but from the consumer data produced by every transaction.

The state-run press agency, Xinhua, has trumpeted bike-sharing as one of China’s “four great new inventions.” (The other three are mobile payments, e-commerce and high-speed rail.) It may sound absurd to compare a dockless bike to the world-changing inventions of China’s past: paper, gunpowder, the compass and movable type. But the boast conveys the importance that Beijing assigns the “sharing economy” in helping China make the leap from a manufacturing-based to a service-oriented economy. Last year, according to government figures, China’s sharing economy accounted for more than $500 billion in transactions involving roughly 600 million people. (An estimated 55 million Americans will use a sharing service this year, according to a CBS report.) And with Beijing planning on an annual 40 percent growth rate, officials are commanding this new economic engine to account for 10 percent of the national gross domestic product by 2020 and 20 percent by 2025.


Cities around the world have embraced the sharing economy — Seoul, Amsterdam, Milan — but China is the first country to frame it as a “national priority.” While innovation can’t be conjured on demand, Beijing has financed start-up incubators, offered tax incentives, formed think tanks and kept foreign competitors away. “This is state capitalism,” says Jeffrey Towson, a private-equity investor and a professor of investment at Peking University. “When the government gives the green light, everybody follows.” That includes investors. Mobike and Ofo, which are financed by China’s biggest tech giants, Tencent and Alibaba, respectively, have raised roughly a billion dollars each in venture capital. (Didi Chuxing, the ride-sharing company that bought out Uber’s China operation last year, is even bigger — with $5.5 billion in financing and 450 million users across China.)

‘As China defines it, even Amazon would be part of the sharing economy.’

In this frenzy, investors have thrown millions of dollars at almost any venture with a “sharing” label, from basketballs and refrigerators to luxury handbags and phone chargers. Not all the ideas fare well. The Shared Girlfriend sex-doll service, for example, was shut down in September in response to a public outcry. The police also forced a Beijing company to stop renting out “napping capsules,” condemning them as fire hazards. Other ideas, on closer inspection, hardly look innovative. The “shared bookstore” is really just a lending library. And the “shared washing-machine service” — isn’t that a laundromat?

China’s sharing economy has veered sharply away from how the term was originally defined: as a peer-to-peer exchange of underutilized goods and services. In China, “sharing” now means almost any short-term rental of a product or service activated by a smartphone. Moreover, the things on offer, like Ofo’s 6.5 million bikes, are not spread out among individuals but are owned by the tech companies themselves. The same is true for the spoils, from revenue to data. As a result, the ideals that still animate the concept in many other places — the reallocation of unused resources and the community that forms around it — are essentially absent in China. “I was thrilled when I first heard China was so committed to the sharing economy,” says April Rinne, an adviser who is a member of China’s National Sharing Economy Commission. “But it’s all so transactional, and the definition of sharing has gotten so broad that it’s almost meaningless. As China defines it, even Amazon would be part of the sharing economy.”

Who can blame China for hanging on to the term “sharing economy”? It fits with the image that Beijing wants to project: warm, generous, egalitarian. Robin Li, the chief executive of the internet giant Baidu, said last year that “the idea of a sharing economy is quite similar to that of a communist society,” because both focus on “distribution according to need.” A strategic planner at the advertising firm Havas Worldwide waxed so rhapsodic in a commentary about “the close-knit comradeship” of Chinese consumers that it seemed the idea of sharing was itself a Chinese invention. “There is almost a sense of nobility garnered by having the means to own something yet deciding to share instead,” the author wrote. The prize for puffery, however, goes to The People’s Daily, the Communist Party mouthpiece, which in August celebrated umbrella-sharing enterprises as “a show of human care, releasing the warmth of the city.” A few weeks after that, nearly all 300,000 umbrellas distributed by a new company called Sharing E Umbrella had been either lost or stolen.

CreditIllustration by Andrew Rae

The self-congratulation masks a growing awareness that, for all its economic success, China has become a hard-edged society where the spirit of sharing and social trust is in short supply. The bike-sharing battles expose these cracks, too. Some start-ups struggle with theft and vandalism; one company, Wukong, reportedly lost 90 percent of its bikes in just six months. Meanwhile, Ofo and Mobike have turned this battle into a proxy war between their tech masters. As dozens of smaller companies try to find niche markets, the two giants have deluged major cities with nearly 15 million yellow (Ofo) and orange-and-silver (Mobike) bicycles. Until recently, city governments tolerated the use of public spaces by bike-sharing companies, a concession the companies will not continue to enjoy as they venture overseas. But in Shanghai, where battalions of bikes clog the sidewalks, the city is starting to crack down, hauling thousands away at a time.

None of China’s bike-sharing companies are turning a profit yet. But even as they fight for market share, the data is the destination. “Collecting data is the first goal of the sharing economy,” says William Chou, the head of Deloitte’s telecoms, media and technology practice in China. Every time consumers scan the QR code on a bicycle — or basketball, handbag, umbrella — they provide information about habits, locations, behaviors and payment histories. That’s invaluable not just to Tencent and Alibaba but also to city planners seeking precise information about where to build roads, bridges and subways. “The fight is no longer over who has the biggest fleet,” Towson says, “but who has the smartest fleet.”

Those are the benign side-effects of the sharing economy. But what happens as this data filters into China’s new social-credit system, which promises to rate every individual by her financial, social and political worth? In fact, Beijing has authorized Tencent and Alibaba to conduct social-credit pilot testing, and their bikes serve as the perfect vehicles. There are no walls of privacy. The government has the ability to access company data, good or bad, faster than you can scan a QR code.

One morning recently in Shanghai, I caught a glimpse of some suspicious behavior. I was walking down a tranquil, tree-lined street when a muscular man lumbered past carrying two orange-and-silver Mobikes. As he swept by, a wheel touched the ground and set off an alarm, causing him to heave the bikes even higher in the air. The man was not a bike enthusiast, but he wasn’t a thief, either. As I watched him slip down a side alley and emerge moments later empty-handed, I realized that he was a foot soldier in the bike-sharing wars, dumping competitors’ bikes in hard-to-find places. Rounding the corner, I saw the result of his handiwork: a sea of bikes in almost every hue. Yet not a single orange-and-silver Mobike was in sight.

Correction: December 6, 2017 

An earlier version of this article transliterated incorrectly a Chinese term that means “three rounds and sound.” That term is sanzhuan yixiang, not sanshengyixiang.

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