Debt alert for local authorities (2)

China's local debt is expected to have grown to 13 trillion yuan ($2.1 trillion), or 25 percent of its GDP, according to Haitong Securities.

Local government income growth has been slowing due to cooling property markets.

Local governments are banned from selling bonds directly so they turn to banks, or financing vehicles, set up by local governments, to provide funding.

Over-reliance on investment will also deter the transition toward a consumption-led economy, experts said.

He Keng, vice-chairman of the financial and economic committee of the National People's Congress, the top legislature, said "the scale of investment should be decided by the scale of demand''.

"It is wrong to require a growth rate and an investment to GDP ratio. The mindset that the government should ramp up investment when economic growth is weak should be abandoned," He said.

The National Development and Reform Commission approved a raft of major projects last year, mainly in infrastructure.

GDP growth in the third quarter dipped to 7.4 percent, the weakest since the first quarter of 2009.

But the commission's measures evoked widespread concern that China was resorting to heavy investment to bail out the economy.