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The logo of car-sharing service app Uber on a smartphone over a reserved lane for taxis in a street is seen in this file photo

© Sergio Perez / Reuters

Shanghai will allow private-car hailing services via mobile apps starting next month, the first city in China to legitimize an industry popularized in the U.S. by Uber Technologies Inc.

Drivers for Didi and Kuaidi, the two leading Chinese car– hailing apps that recently merged, will be registered under the same information technology platform for taxis, removing their status as "pirate cabs" or "black cars," according to a statement posted on the Shanghai government's website.

"It is the very first breakthrough in reforming the designated driving services," said Li Min, a Didi spokesman. "Didi is the first car-hailing software company involved in such a program with the government and there are no other cities joining Shanghai on this front at the moment."

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The move by Shanghai, which has traditionally been a testbed for economic policies including being home to the country's first free-trade zone, contrasts with other cities like the capital Beijing, which has fined unauthorized vehicles for offering services via apps including Uber.

As part of the Shanghai plan, smaller companies will be encouraged to join the platform so as to create a uniform service for Shanghai and raise the efficiency of dispatches, according to the statement.

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