Beijing will cap its new small passenger vehicle quotas at 20,000 a month in 2011 as it moves to tackle the city's chronic traffic gridlock.
The monthly quota will be distributed among fleet buyers and first-time private buyers, according to a statement posted on the municipal government's website.
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Only permanent residents of Beijing as well as those in police and military services are eligible and government agencies will not be allowed to buy new vehicles in the next five years, it added.
China eclipsed the United States as the world's biggest auto market in 2009, but worsening air quality and traffic have become hazards in major Chinese cities.
By 2012, Beijing alone will have 7 million vehicles on the road, versus 4.8 million now, according to official statistics provided by the municipal transportation authorities.
Shanghai's municipal government imposes a license fee of roughly 50,000 yuan ($7,524) for each car owned.