Ride-hailing firm Didi licensed in Shanghai

Chinese ride-hailing firm Didi has been licensed by the Shanghai Municipal Transport Commission for private-car booking services, in an apparent easing of tension between regulators and ride-on-demand operators.

Though increasingly popular with users, online ride-booking services have long been warned by authorities in China that they operate in a gray area of the law, under which drivers of private cars are forbidden from carrying passengers for profit. Drivers who pick up passengers using apps like Didi and Uber have been frequently fined by police in many Chinese cities.

Didi's licensing is a milestone for the service, which has been available for more than a year, indicating authorities' recognition of innovation in the transportation sector, said the company in a statement on Thursday.

The license granted by authorities in Shanghai may give companies like Didi and Uber opportunities to operate legally elsewhere.

The Shanghai municipal government said it will grant ride-on-demand licenses for companies that meet criteria including making their data accessible to regulators, having their servers in the Chinese mainland, and screening both vehicles and drivers.

Operators are also required to insure vehicles and passengers against traffic accidents in policies worth up to six million yuan (nearly one million U.S. dollars).

Didi said it is also working with transportation regulators in other cities in China to replicate the licensing model.

Uber also announced on Thursday that a new company it set up in the Shanghai free trade zone expects to receive a license for ride-on-demand services soon.