SHANGHAI'S car licence plates, everyone would have to agree, could well be the world's most expensive pieces of metal - worth even more than gold - even though they are made of plain aluminium.

That judgement is based on the value such plates acquire through a monthly no-bottom-price auction, a practice that Shanghai began to adopt in 2000.

The plates' ever-rising prices have become a real dilemma awaiting potential local car buyers: it seems they have to be ready to lavish a huge sum of money - as much as half the price of their cars - on the plates. This is an issue worth seriously considering before money-wise Shanghainese set out on the road to modern mobility.

Unique nationwide, the controversial local practice has put Shanghai under growing criticism from the motoring public, with additional pressure now coming from the central government. However, it seems the local authorities will stick with their approach, at least for the time being.

Jam today

A quick glance at changes in the average bid-winning prices of such plates over the past four years or so can be convincing enough.

While car buyers, in 2000, needed to pay only a few thousand yuan to obtain a licence plate, they now need to pay a sum that may be 10 times the previous level.

The plates' prices reached a record-high of over 45,490 yuan (US$5,500) on average in April, with the lowest fetching 44,200 yuan (US$5,345), still a daunting figure for many, especially those who seeking a family car priced below 100,000 yuan (US$12,100).

Things changed a little bit in May, when the average bid-winning price dropped to around 34,230 yuan (US$4,120), with the lowest down to 10,800 yuan (US$1,300), a 16-month-low figure.

The significant lowering of the plates' prices was attributed to a temporary policy launched by authorities, only effective in May and June, that allows local motorists to change the plates of their motorcycles into ones for cars, thereby substantially increasing the plate quota.

To Zhou Ya, director of the policy and regulation department under the Shanghai Development and Reform Commission, the plates' prices are a reasonable result of the city's overall traffic policy, one that emphasizes the development of public transport.

"Given the limited local road resources, we feel we can't cater to one group of people at the cost of another - larger - group's interests," Zhou said.

Even though more than 10 per cent of the local population will have private cars in the near future, it would be unfair to neglect the remainder - those who cannot afford to buy a car, he added,

Zhou stressed that all the earnings through the auctions have been poured into the city's massive transport infrastructure projects.

Given the fact that the practice has been in place and running smoothly for quite a few years, it's not likely that there will be a sudden major change in the policy, Zhou said, dismissing rumours that a special bond will be issued by the city in July to replace the auction practice.

"What we need is a well-balanced, legal, reasonable and sustainable solution in order to tackle the problem," said Zhou.

Deterrent effect

But adverse opinions among the public can still be frequently heard.

"I have decided to quit my car purchase plan for the moment since the expenditure on the licence plate is really not inconsiderable," said Xu Zheng, a local engineer, who had planned to buy a domestically made car priced at around 100,000 yuan (US$12,090).

The high price of licence plates will continue to be a discouraging factor as the local car consumption market takes off, he said.

Statistics indicate that, with an urban population of nearly 19 million, there are over 2 million vehicles on local streets, including about 200,000 owned by individuals.

In comparison, Beijing already has over 1 million cars that belong to individuals, while in the Yangtze Delta region, the figure is about 800,000.

One result of the plates' hefty prices is that many new buyers in the city have begun to have their cars registered in Shanghai's neighbouring areas, such as Suzhou of Jiangsu Province, a practice that has led to administrative problems and tax losses related to such "outside" cars, as has been admitted by local transport authorities.

Even the central government is putting pressure on Shanghai. A senior official from the Ministry of Commerce earlier criticized Shanghai's practice, saying it goes against China's new road safety law that came into effect in May.

Some others, however, hold different opinions.

"It'll be no good if the restriction on new cars is lifted totally since we've already frequently seen traffic jams on the roads," said Angela Yang, a local white-collar.

"For such a big metropolis as Shanghai, the priority should definitely be public transport, and there is no other choice," said Chen Xiaohong, professor at the transportation engineering school of Tongji University. If the policy is eventually cancelled, local authorities need to handle the issue in a smooth and careful fashion, she said.