It is expected that the central government will introduce an emergency mechanism for local government debt risks by the end of the year.

According to media reports, China has more than 5.45 trillion yuan ($810 billion) local government debts, and newly added debt exceeded 1.14 trillion yuan.

According to the draft budget for 2016, the scale of newly added local government debt is 1.18 trillion yuan, which means the quota for new local government debt this year is about to complete till now.

The central government is paying great attention to the local government debt issue. Minister of Finance Lou Jiwei said during the G20 Leaders Summit in Hangzhou in East China's Zhejiang province that the central government has enhanced its supervision over local government debts.

The ministry has already launched an inspection to determine the size of local government debts, and it has strictly prohibited local government debt in the name of public-private parterships.

The new emergency mechanism requires local authorities to draw up medium- and long-term emergency response plans for their debt risks.