About 300 taxi drivers went on strike in a southern Chinese city, smashing cars and demanding a crackdown on unlicensed taxis in the latest protest against illegal taxi competition in China.

Hundreds of cab drivers gathered Saturday in front of government buildings in Chaozhou, a city in Guangdong province, said an official Sunday from the Chaozhou city government who would only give his surname, Chen.

More than 200 taxis were parked in front of the gate of a government office as drivers sought greater enforcement against unlicensed taxis, the official Xinhua News Agency reported.

Chen said police detained seven people suspected of smashing cars belonging to drivers who had refused to participate in the strike.

The drivers were expected to resume it on Sunday, Xinhua said. But Chen said the strike appeared to have been called off.

"There has not been a strike today. The taxi drivers are back in business," Chen said by telephone Sunday.

Xinhua quoted drivers as saying they were unhappy that the Chaozhou city government continued to add new taxis even though the supply of 800 licensed cabs has already exceeded the demands of the small city.

Zhang Yiqun, a vice-mayor of Chaozhou, has pledged a crackdown on unlicensed taxis, and drivers were holding the strike to demand that the government fulfill its promise, Xinhua said.

The Chaozhou protest is the latest of several similar strikes that have been reported in at least four other Chinese cities as drivers upset at rising costs and unlicensed competition have increasingly taken to the streets.

In an apparent response to similar concerns, taxi rental fees in Guangzhou will be cut by 800 yuan ($117) a month starting Monday, a report by state television said Sunday, without giving details.

Forty suspected illegal taxi drivers in the southern city have been detained as police stepped up efforts to eradicate unlicensed cabs, CCTV said.

The unrest highlights the increasing anxiety felt by many Chinese workers over their incomes and job security as China's economy slows amid the global financial crisis.