The central government has taken key steps toward increasing the responsibility of individual regional and local governments for their own borrowing and investment decisions, according to a report by Moody's, the global credit rating, research and financial analysis firm.

The new guidelines, announced on Oct 2 by the State Council, represent an important move toward establishing a new direct-borrowing model for local governments, Moody's said.

The guidelines will restrict indirect borrowing, such as borrowing through local government financing vehicles, known as LGFVs, thereby leading to a deceleration of local government debt, which has been climbing sharply in recent years.