All 100 buses with the city's only bus company, Bazhong Bashan Public Transport Company, did not run at 6:40 a.m. as usual, said Yu Zhixiang, deputy general manager of the private company.
People were left standing at bus stops and many ended up walking to work or school or taking taxis as drivers refused to operate buses.
The municipal government gathered and met with drivers at a school from 9:00 a.m. to 11:30 a.m., said Yue Wei, Bazhong City publicity department.
Drivers said they wanted reduced hours and more pay. Government officials said they will try to work out a new salary system as soon as possible, Yue said.
Drivers also demanded a full-scale safety inspection of their buses after a fatal blaze on June 5 killed 27 and injured 76 on a bus in Chengdu.
Traffic began to resume gradually at 12:30 a.m. as some drivers went to work after the meeting, Yue said.
The city, with a population of more than three million people, is located in northeast Sichuan, 400 kilometers away from the provincial capital Chengdu. It has 200,000 people in its downtown area which measures 10 square kilometers.