BEIJING, Jan. 16 -- China's central bank said Thursday that it will work with other authorities to investigate and close down incompetent financing companies run by local governments.

Companies with bad credit, confusing services or unsustainable debt will be closed to prevent financial risks, said the People's Bank of China at a conference about financial market and credit policies

Wary of the hefty debts accumulated by its local governments over the years and the potential huge risks associated with it, China's central government is moving to officially allow local governments to issue bonds.