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China slaps ban on taxi hailing apps using unlicensed cars

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Government sides with the official taxi lobby, again. Photograph by ChinaFotoPress via Getty Images

China’s transport ministry has banned taxi hailing apps such as Uber Technologies Inc and local rivals Kuaidi Dache and Didi Dache from using cars and drivers without taxi licences in a bid to regulate the rapidly growing sector.

The nationwide ban comes after authorities in the Chinese city of Chongqing began investigating Uber in December over concerns that its drivers were not properly licensed.

It’s one of the clearest signs yet that governments across the world are concerned about the risks to public safety arising from the rapid spread of taxi-hailing apps. The issue has been highlighted by cases such as the rape allegations against Shiv Kumar Yadav, an Uber driver in New Delhi, which sparked uproar in India in December and led to swift measures by officials to restrict the trade.

“Every limousine app company should abide by transport market rules, take their responsibilities seriously, and ban private cars from operating on their platform,” the Chinese Ministry of Transport said in a statement late on Thursday.

“This will allow passengers who use these services to travel at ease.”

However, Bloomberg reported that the Ministry took pains to say it wasn’t banning such apps, saying that “apps for premium car services have an innovative service model and play a positive role in meeting the high-end and differentiated transportation market.”

The statement did not name any taxi hailing apps.

The ban comes after a series of strikes by licensed cab drivers in cities such as Shenzhen and Nanjing, amid concerns over the threat to their business from ride-hailing apps. A number of cities had already announced crackdowns on unlicensed vehicles, with Beijing becoming the latest to do so earlier this week.

Uber, which recently drew Chinese internet giant Baidu Inc (BIDU) into its circle of backers, has also come under fire in other countries over licensing issues. The company, through its apps, charges a fee to play matchmaker between passengers and drivers, some of whom are registered taxi drivers.

The U.S. company is a comparative latecomer in China, where taxi app users are set to triple to 45 million by 2015 compared with 2013, according to Chinese research firm iResearch.

Local apps Kuaidi, backed by Alibaba Group Holding Ltd (BABA), and Didi, in which Tencent Holdings Ltd (TCEHY) has a stake, hold between them around 90 percent of China’s taxi app market.

Uber, Kuaidi and Didi were not immediately available for comment.

Learn more about the recent news with taxi hailing apps from Fortune’s video team: