Didi Chuxing, a car-booking mobile app owned by Didi Kuaidi, is shown on a mobile phone, Sept 17, 2015. [Photo / IC]

Didi Kuaidi, Uber's rival in China, plans to raise about $1 billion, which could value China's top ride-hailing company at more than $20 billion, the Wall Street Journal reported on Thursday citing sources.

The new round of fundraising will provide more funds for Didi Kuaidi, so as to deal with challenges from Uber China.

Currently, Uber and Didi Kuaidi are in fierce competition in China's car-hailing market, with both spending heavily to subsidize fares to attract more drivers and riders.

Didi Kuaidi, which is backed by Chinese technology giants Alibaba and Tencent, has the largest market share of car-hailing apps in China.

According to a report by China Internet Network Information Center earlier this year, Didi Kuaidi holds 87.2 percent of China's private car hailing market.

Last month, Didi Kuaidi announced a strategic partnership with China Merchants Bank, under which the bank became the first bricks-and-mortar bank that can offer in-app credit card payments to Didi Kuaidi users.

Earlier, Didi Kuaidi said in September it had completed a $3 billion fundraising effort, which boosted its valuation to $8 billion.

Uber's Chinese business boosted its valuation last month to more than $8 billion after raising more than $1 billion in its latest funding round, but the US ride-hailing app is not yet profitable in the Chinese mainland because of the intense competition.

"We're profitable in the United States, but we're losing over $1 billion a year in China," Uber CEO Travis Kalanick told Canadian technology platform Betakit on Monday.

Uber currently operates in more than 40 Chinese cities and plans to be in 100 by the end of the year.

Agencies contributed to this story.