Two Chinese State-owned firms joined hands on Friday to offer smartphone-based car-rental services, in a move to tap into the country's booming transportation market.

Beijing Shouqi Group, a major car-rental and taxi firm in China, inked a strategic partnership with Beijing Municipal Road & Bridge Group Co Ltd, a major construction firm in China.

Under the deal, Beijing Shouqi can access the latter's more than 50 parking lots, located under the city's second and third ring roads, to offer more convenient car-rental services.

Beijing Shouqi launched its new-energy-car-rental app GoFun in 2015. Unlike rival products that charge by the day, users of GoFun can rent electric cars by the hour and by mileage.

The new deal will allow users of GoFun to return cars to the nearest parking lot. GoFun currently operates in four cities, with 1,100 new energy vehicles for rental in Beijing.

Wei Dong, CEO of GoFun, said the two sides will also set up a joint firm to meet Beijing consumers' growing desire for car-sharing services, but he declined to offer more information about the investment size.

The move is part of Beijing Shouqi's broad efforts to diversity its business as it faces mounting competition from internet firms such as Didi Chuxing, China's largest ride-hailing firm.

Zhang Xu, an analyst at Beijing-based internet consultancy Analysy, said over 100 Chinese firms had marched into the electric-car-rental sector last year. "To ease traffic jams and protect the environment, local governments have placed a limit on the number of cars allowed to travel within big cities. The service gives non-car owners easy access to vehicles." Zhang said.

Email: zengyunheng@nbd.com.cn