China's Internet giant Tencent Holdings inked a strategic partnership with Bank of Beijingon Wednesday to jointly offer some public services online.

The Shenzhen-based tech company will gain a 10 billion yuan ($1.6 billion) credit linefrom the bank, Tencent's news portal qq.com reported on Wednesday.

Under the deal, the bank's online local medical services such as booking hospitalappointments and paying small medical fees can be accessed via Tencent's popular instantmessaging mobile application WeChat, said the report.

In addition, the two will further their cooperation in developing Internet finance andsmart city initiatives, Yan Bingzhu, chairman of Bank of Beijing, was quoted by the reportas saying.

Tencent's move came soon after its major rival Alibaba Group Holding launched a tie-upwith the Beijing municipal government to work on a smart city project together on April22.

The project would allow Beijing residents to access public services such as passportrenewal, making hospital appointments and paying water charges via Alibaba's third-partyonline payment tool Alipay as well as domestic social networking service Sina Weibo, inwhich the e-commerce giant holds a 19 percent stake, according to a press release sent tothe Global Times by Alibaba on Wednesday.

Alibaba said in the press release that it has signed up with a first batch of 12 cities aroundthe country including Beijing, Shanghai, South China's Guangzhou and East China'sHangzhou for the smart city initiatives, and plans to cover a total of 50 cities by the end ofthis year.

Meanwhile, Tencent reportedly rolled out similar services in cities including Shenzhen,Guangzhou, and Shanghai and announced on Wednesday on its WeChat account thatanother 15 cities will join the group.

Tencent has a chance to beat Alibaba in the popularization of smart city projects, thanks toits large and more active user base on WeChat, Zhang Yi, CEO of Guangzhou-basedmarket consultancy iiMedia Research, told the Global Times Wednesday.

But some users, who regard WeChat only as a social networking tool, may abandonWeChat in the future out of concerns of too many public service information notices,therefore Tencent will need to balance between its public service function and socialnetworking features, said Zhang.

Calls to Tencent PR representative remained unanswered by press time.

Chinese Internet companies could see massive business opportunities in smart citydevelopment, as public service institutions' eagerness to go smart has been fueled byPremier Li Keqiang's "Internet Plus" plan, said analysts. The Internet Plus plan aims tointegrate traditional business with the mobile Internet, cloud computing and the Internetof Things.

"Internet companies not only can gain a fortune by offering technology services such ascloud computing to governments, banks and hospitals, but also can obtain a greater userbase to boost their mobile payment services," Li Chao, an industry analyst with Beijing-based market research firm iResearch, told the Global Times Wednesday.

Mobile payment service is a very crucial venue of helping Internet companies expand intoChina's lucrative finance sector, Li noted.

In order to spur the mobile payment service on WeChat, Tencent disclosed a deal withsupermarket chain Carrefour on its WeChat account on Tuesday, enabling Chineseconsumers around the country to pay bills via WeChat when shopping in Carrefour's 237supermarkets in China.

Meanwhile, Alipay also inked similar partnerships with over 1,000 supermarkets andstores nationwide on the same day, including Carrefour, according to media reports.

Despite neck-and-neck rivalry between the two, Alipay remained the dominant leader inChina's mobile payment market worth 5.99 trillion yuan by seizing an 82.3 percent sharein 2014.

Tencent's third-party payment service Tenpay, which was linked with WeChat in July2013, was second with a 10.6 percent share, showed a research note issued by iResearch inMarch.

Both Li and Zhang said that the tie-up with Bank of Beijing, which offers a lot of publicmedical services, can benefit WeChat's payment services by gaining some market share.

According to qq.com's report, the medical services offered by Bank of Beijing via a chip-enabled card has 3.1 million registered users.