China's booming southern city of Guangzhou has imposed a cap on the number of cars allowed to be sold in an effort to curb worsening traffic and pollution, state media reported on Monday.

Guangzhou, one of the biggest cities in China with a population of more than 16 million according to the Chinese press, will issue registration plates for only 120,000 small and medium-sized passenger cars for the next 12 months.

The policy is aimed at "ensuring the effective flow of the city's transportation and protecting and improving the air quality," said a city government statement posted online after the weekend announcement.

The number of cars that will be allowed to be sold over the next year is roughly half the total sold in 2011, according to reports in the state media.

Guangzhou had 2.4 million cars by the end of May, more than double the number five years ago, according to a report in the China Business News.

It becomes the third Chinese city, after the capital, Beijing, and Guiyang in the country's southwest, to introduce registration plate limits in an effort to combat the escalating number of cars on China's roads.