The skin measures 80-cm long and is believed to be from a giant panda no older than 1 1/2 years.

Police, acting on a tip-off, found the panda skin hidden in the boot of a taxi at a highway toll station between south-west Sichuan's provincial city of Chengdu and Chongqing municipality last November, Sing Tao Daily reported yesterday.

Investigators traced the skin to its seller, Sichuan peasant Yang Shicheng, who reportedly caught the panda while hunting for wild fowl in the mountains.

He had spotted three giant pandas but two of the older animals managed to run away while the youngest one scrambled up a tree.

Yang shot down the animal, strangled it to death with a rope, then skinned it on the spot.

Six months later, he sold the skin to peasant Gao Hongyou for 2,000 yuan. Gao, in turn, sold it to another peasant for 20,000 yuan.

By the time the skin reached Chongqing, its price-tag had skyrocketed 275 times to 550,000 yuan, the paper reported. It did not say what the skin was meant for.

If convicted, Yang, Gao and the other suspects face a maximum jail sentence of 20 years.

Giant pandas are one of the world's most endangered species and commercial trading of the animal and its products have been banned since 1984. There are only about 1,000 giant pandas left in the wild, scattered in the mountains in Sichuan, Shaanxi, Gansu and Qinghai provinces.