China's Finance Ministry declared Friday that state-owned financial firms are forbidden from providing any funding for local governments except for bond purchases. The move came as China steps up its efforts to control financial risks and clamp down on hidden debt.

The ministry issued a notice stating that state-owned financial firms and local governments wouldn't receive any guarantees on any loans they might arrange. The notice also said that state-owned financial firms mustn't be treated as funding tools for local governments or SOEs. Also, the ministry said that shareholders of state-owned financial firms must use their own money to invest more in those companies.