Local governments are unlikely to default on their debt, which is cushioned by China's strong economic growth, the Shanghai Securities Journal reported, citing the National Development and Reform Commission (NDRC).

Xu Lin, head of the fiscal and financial department of the NDRC, reaffirmed that China's local government debts are under control since the local fiscal revenues double every three to four years.

"It's unnecessary to shorten urban construction investment bonds based on irrational judgment on China's local government bond risks," Xu told China Securities Journal in an interview, addressing investors' concerns of the huge amount of China's equivalence to municipal bonds.

The government issued 347.5 billion yuan of urban construction debt during 2005 and 2010.

By Sun Yuanqing