The closure of a key road at the embassy's behest has made it difficult for thousands of locals to get to work and school, and some say the media have been ordered not to cover the issue.
In just over a month, four Chinese-made buses delivered to Peshawar have caught fire, forcing transit service to be suspended.
With extremists being reined in, Pakistan is improving its infrastructure.
The government is planning to extend services to more cities soon, officials say.
The project is expected to be completed by September 2018, bringing economic development and tourism to a region previously struck hard by militancy.
A new firefighting service equipped with motorcycles will be able to reach fires on narrow streets, holding them off until larger fire trucks can arrive.
The women-only taxi service, launched in Karachi last March, began operations in Peshawar in January.
The BRT project was inaugurated October 19 and is expected to take six to nine months to complete.
Terrorist attacks against Pakistan Railways have reduced sharply due to the presence of police and army forces, officials say.