The Ministry of Finance requires that by the end of 2020 all levels of government in China publicly release detailed financial reports.

Under the measure approved by the State Council on Wednesday, governments must disclose in these reports their assets, debts and operational costs, which currently are not included in their annual financial reports.

"The approval of the regulation marks the official beginning of China's governmental financial report reform, which will help accelerate governmental transparency nationwide," the ministry said in a statement.

"At present, governmental financial data released to the public are incomplete, and thus cannot reflect the true financial situation of the governments," it said.

The statement said there is good reason to adopt a new system of accounting－accrual-basis accounting, in which income is reported when it is earned and expenses when they are incurred－in government financial reports because through this they will give the whole picture of financial status, operational progress and middle and long-term sustainability.

Up until now, government financial reports often did not list debts, assets or operational costs. Under the reform, the reports will include balance sheets, income and expenses, and comprehensive analyses based on the data.

The new system will be helpful in regulating and supervising governments' management and will provide solid information for the credit rating of local debts, said an industry insider close to the ministry.

The reform will be carried out in three steps.

First, the authority will build up a government accounting framework this year and collect data on local governments' debts.

Then, in 2016 and 2017, some local governments will start releasing accrual-basis financial reports as pilot projects.

Finally, governments at all levels will be required by 2020 to release the reports and financial analyses.

At the national finance conference in Beijing last month, Finance Minister Lou Jiwei said that China's fiscal revenue will shift from rapid growth to medium-to-low level growth in the coming years and that fiscal management must be more strictly regulated and more scientific.

Lou said local governments must set their revenue targets at a realistic level and promote a healthy development of the economy.

"The government should avoid paying too much attention to the speed of financial revenue growth," he said.

He asked authorities to focus on transforming the economic structure and achieving more balanced growth while implementing positive fiscal policies.

Reform of budget management, which began in 2014, will further expand governmental transparency in the coming year, he said.

Financial priorities will include increasing the management of local government debts, while solving problems with existing debts, and strictly controlling the issuance of new loans.