Apple Inc. has just poured $1 billion in Uber’s largest competitor in China, Didi Chuxing Technology Co. Analysts believe that the move is expected not only to help the U.S. company’s driverless car business grow, but also help Apple mend its tense relationships with Beijing.

The decision was announced a week after the Chinese government banned iTunes and iBooks from the country. The U.S. tech giant is directly interested in China as most of its manufacturing plants are based there. So, investing in the country’s largest home-grown ride-sharing business might be the best way to reduce the tensions.

Didi Chuxing is an important company for the Chinese government though the firm was nearly shut down when it started to offer ride-hailing services like Uber. Back then, Beijing said that Didi was putting fully licensed taxis out of business.

As a response, Didi agreed to allow taxi drivers to feature on the company’s e-hailing app and offer their services. Also, the company recently closed a deal with Shanghai-based taxi company Haibo to split revenues.

Didi network comprises 400 cities and 99 percent of the taxi-hailing market. In 200 cities the company makes profit. Furthermore, partnerships with local taxi companies also help Didi reduce traffic congestions, a growing problem in China’s urban areas.

Since up to 70 percent of Beijing residents own a car, it is very difficult to go by car to any area of the city. As a result, the government had to set some restrictions, deciding which days cars can be used. Furthermore, there’s a 100 percent tax on foreign vehicles brought to the country to discourage the Chinese from buying more cars.

So, Didi is now helping the government address the country’s ever growing fleet of vehicles. By offering cheap rides, the ride-hailing company helps both people who don’t have a car and those who seek a better alternative to public transportation. In China, it is cheaper to travel by taxi than by private car due to restrictions and taxes.

Didi is confident that with a fleet of 1 million taxis it can serve the entire population of China. At the moment, taxis are the key to solving transit issues and displacing car ownership.

Apple’s $1 billion bid is the same amount Uber is reportedly hemorrhaging in China. Plus, Didi is also interested in building a fleet of driverless cars just like Apple, which has now also the opportunity to build strong alliances with key Didi investors and partners such as Lyft, Tencent, Ali Baba, and Grab.

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