Guideline is set on local govt debt risk

China released a contingency guideline on Monday for handling local government debt problems, a move that analysts said is part of the country's fiscal reform to strengthen budget management and prevent its government debts from ballooning.

The guideline specifies for the first time four types of "debt risk events" and corresponding emergency responses. Local governments will take full responsibility for paying debt through such emergency measures as scaling down infrastructure investment, reducing government expenditures, making use of land sales and selling assets.

It also sent a warning to local governments that they would not be bailed out in the event of any local debt crisis.