China said Thursday that it will allow four of its most developed cities and provinces to issue bonds on a trial basis, giving cash-strapped local governments a much-needed funding boost.

Local authorities have been under financial pressure after amassing huge debts through financing vehicles and lower revenue from land sales as the central government attempts to cool the red-hot property market.

Shanghai, the eastern province of Zhejiang, southern Guangdong province and the southern boomtown of Shenzhen would be allowed to issue bonds on an "experimental" basis, the Ministry of Finance said in a statement.

The move would "ease their financial strains and curb fast-spreading debt risks", the official Xinhua news agency said.

Local governments, which are banned from borrowing directly from banks, set up financing vehicles to fund infrastructure and other projects and their growing debts fuelled concerns about a potential explosion in bad loans.

The ministry gave no precise timing for the bond issues but said central government permission was granted based on a 2011 quota, implying the local governments will go to the market this year.

In June, China's National Audit Office put the debt held by local governments at 10.7 trillion yuan ($1.65 trillion) at the end of 2010 -- or about 27 percent of China's 2010 gross domestic product (GDP).

Since then, several provinces have published reports that showed their debt-to-GDP ratio was higher than the national figure.

But China's top banking regulator, Liu Mingkang, said this week that risk from local government debt could be controlled.

Greek debt default, cut on EU summit agenda: Slovakia
Bratislava (AFP) Oct 20, 2011 - Greek default and a so-called 'haircut' of the country's massive debt are on the agenda of the European Union's Sunday crunch summit on the eurozone's debt crisis, Slovakia's premier said Thursday.

"Default and a haircut of the Greek debt is on the agenda of Sunday's summit," outgoing prime minister Iveta Radicova told AFP a week after she sacrificed her government to secure passage of a crucial eurozone bailout fund.

"What matters now is whether the default will be chaotic or coordinated, regulated," Radicova added, warning that "if the tsunami is uncontrolled, it will smash us all.

"Unless Greece fulfills the programme of consolidation, reforms and consolidation of its economy, no further loan will help them and everybody knows it," Radicova insisted.

Where a reduction or 'haircut' of Greek debt is concerned, Radicova said that current proposals were not enough.

"Bottom line is, so far the haircut has been too low," she told AFP, referring to a July accord on the banks taking a 21 percent hit on their holdings of Greek government bonds.

"There are requests for a 50-60 percent haircut," she said, adding that eurozone finance ministers were yet to make a final decision.

Despite having lost power, Radicova will represent her country at Sunday's summit.

In an initial parliamentary vote last week, Radicova -- Slovakia's first woman prime minister -- failed to secure approval for a crucial eurozone bailout fund because of splits in her centre-right coalition and a tactical play by the opposition left Smer-SD, which abstained.

Her government fell as Radicova had tied passage of the eurozone rescue fund to a confidence vote in her administration.

After securing an early election in March, the opposition left Smer-SD then backed the revamped 440-billion euro ($607 billion) rescue fund, ensuring its ratification by all 17 eurozone nations in another vote last Thursday.

As EU powerhouse Germany was reportedly mulling boosting the firepower of the bailout fund to 1.0 trillion euros ($1.38 trillion), Radicova said Slovakia -- after Estonia, the eurozone's poorest member -- does not agree with further leveraging.

"We don't agree with any further leveraging through state guarantees. And we are not the only ones -- the German Bundestag said that their guarantees are also the ceiling for them," Radicova said, referring to Slovakia's approval of 7.7 billion euros-worth of state guarantees for the EFSF.

"Leveraging of the EFSF through guarantees of states that need to cut their own deficits, isn't possible," she added.

Meeting at what is being dubbed the 'mother-of-all-summits' on Sunday, EU leaders are expected to micro-manage how much Greece can default on its massive loans, look at how much banks will need to cover losses on bad Greek loans and nail down safeguards against any repeat of the present mess.