China's urbanization drive will speed up the reform of the fiscal and public project funding, as the current financial mechanism for local governments can't meet the huge funding need, according to a newly issued urbanization plan and officials.

The unprecedented National New-Type Urbanization Plan (2014-20) outlines a "diversified" and "sustained" funding system for urbanization. And, for the first time, the State Council has agreed to let local governments issue municipal bonds.

At a Wednesday news conference, Liu Kun, vice-minister of finance, said the government will boost the bond market by allowing local governments to issue bonds at their own discretion.