China has issued detailed rules on bond issuance by local governments to ensure such debt sales are appropriately priced and improve market transparency to protect investors.

Local governments will be allowed to issue general bonds with maturities of one, three, five, seven and 10 years, and issuance of any one maturity cannot exceed 30 percent of the total, according to the rules from the Ministry of Finance.

Previously, local governments could only issue such bonds with maturities of five, seven and 10 years.

Proceeds from such bond issuance will fund welfare projects and local governments will be responsible for repaying their debt, the ministry said.

"Localities must strengthen their on-site management on debt issuance to ensure there is no violation of fair completion, transfer of benefits and direct or indirect seeking of illegitimate interests," it said.

Local governments must provide information on bond sales, local finances and existing debt, and localities should attract institutional investors, such as pension funds, housing funds, insurance firms, and individual investors, it added.

Beijing is struggling to rein in local government debt, estimated at around $3 trillion. Local governments rushed to finance infrastructure and real estate projects, especially after the 2008/09 global financial crisis, in efforts to stimulate economic growth.

Local governments will be allowed to issue 500 billion yuan ($79.85 billion) in general bonds this year, under a pilot programme to develop a municipal bond market.

The finance ministry has also said local governments will be allowed to swap up to 1 trillion yuan of higher interest, maturing debt for lower interest bonds.