The Ministry of Finance has begun drafting rules for local governments' debt regime, a task that is expected to be completed no late than the end of next year.

Having a system to match local government debt - which could increase by 30 trillion yuan ($4.9 trillion) from now to 2020 - with development needs is an indispensable part of the national program to speed urbanization, according to financial specialists close to the ministry.

Without regulations or standards for municipal-level debt financing, it will be hard for the market to play a role in allocating the resources needed by China's many fast-developing cities, they said.