It would be a change from the concept that, for the sake of the nation's financial security, local governments should never be allowed to debt-finance their budgetary expenditures, for whatever purposes, to the concept that they are allowed to do so, but only through channels that are fully legitimate and can be monitored by the central government and by the public.

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So, what's the big deal? The big deal is that the new budgetary system would be tantamount to a major government reform. Once local governments are allowed to raise debt, it is highly likely that their doing so will leave an important political impact.

It would give rise to a series of questions. At the national level, how would the central government share with the provinces and cities all the resources available in the financial market, and how would local governments make themselves responsible financial managers? On the local level, how would the budget and all the budgetary expenditures be planned and adopted?

A stronger system of the people's congress would be required to answer all such questions. And as it were, all levels of the people's congress system would have to rely on professional financial managers to be able to tackle their budget-making task. The people's congress is to act more like the board of directors for a government.

Debt-issuing local governments will also have to learn to work with the market-economy financial advisers like listed companies. To raise the capital they want from a competitive market, they would have to offer investors high-quality projects rather than projects chosen by the mayor based on his whims.

Without such a change, funding would always remain a problem for many things planned by the Chinese leaders, from a more service-oriented economy to such things as new schools and hospitals that are needed in local social development.

The author is editor-at-large of China Daily.