Hangzhou is to bring ride-hailing apps like Didi and Shouqi under its urban transportation management system, meaning their drivers now need to meet the same standards as those in traditional taxi companies.
From May 1, the city will issue a uniform work permit for both sets of drivers, removing any regulatory differences.
The requirement that ride-hailing drivers hold local hukou — household registration permits — will also be lifted, while the maximum age limit will be raised from 60 to 65.
"Ride-hailing services have become a big hit and a force to be reckoned with in the local taxi market," Chenma Duoli, director of the legislative affairs committee at the Hangzhou people's congress, said on Wednesday.
"We hope these unprecedented moves will further liberalize the taxi market and better facilitate passengers' rising transportation needs.
"Ride-hailing should be regarded as an important part of the overall taxi services, and their services should be regulated and supervised to ensure smooth development and fair market competition," he added.
Hangzhou has over 80 taxi companies, with 13,500 cabs and 28,000 drivers. Residents can also use 12 ride-hailing apps, with 11,000 registered cars and 12,000 registered drivers. Both the cab firms and ride-hailing platforms provide a combined 1 million trips each day.
Zhang Kejie, a cabbie for Lanlian taxis, welcomed the new rules but said ride-hailing apps should be further regulated.
"There are still many unlicensed drivers working for these platforms, which seriously disrupts the market and harms our interests," he said, adding that he hoped the new regulation will help eradicate such practices.
China's ride-hailing and bike-sharing apps have enjoyed robust growth, but a price war has emerged as each seeks to grab a bigger market share.
An article published online by the Ministry of Transport this week said that when platforms offer subsidies to both passengers and drivers, it results in market chaos and long-term harm to the transportation market.
"Price wars eventually lead to an irregular and low-quality market, harming legitimate drivers' interests and hindering the healthy development of the ride-hailing sector," the article said.