CHINA'S top auditor said it will carry out a nationwide audit of government debt, underlining mounting concerns over the country's rising debt level and lack of transparency.

The move was at the request of the State Council, or cabinet, the State Audit Office said in a statement on its website yesterday, without giving details.

The announcement came after Chinese officials and global market watchers warned about risks in the non-transparent local government debt and the likelihood of a first default of domestic bonds in 16 years.

Standard Chartered, Fitch and Credit Suisse have estimated local government debt in China at the equivalent of anywhere between 15 percent and 36 percent of the country's output, or as much as US$3 trillion based on World Bank's China gross domestic product (GDP) figures for 2012. The latest official figure for China's local government debt was in a 2011 NAO report which put it at 10.7 trillion yuan (US$1.74 trillion) by the end of 2010.

Vice Finance Minister Zhu Guangyao said earlier this month that the size of local government debt may exceed previous estimates, and the central government is yet to figure out how much debt local governments had built up.

The audit office warned in a June report that debt levels among local governments are rising and the financial burdens and risks are not being properly managed.

Local governments are believed to be under huge pressure to pay back their debts.

Some 127 billion yuan of so-called local government financing vehicle notes will expire in the second half of this year, Everbright Securities Co said, the most in its data going back to 2000 and more than double the 62.7 billion yuan that matured in the first six months.

Analysts at Moody's Investors Service, Deutsche Bank, and Shenyin & Wanguo Securities, have expressed concern over the looming systemic risks and possible default of weak company or government bonds.

There have been no defaults in the publicly traded domestic debt market since the People's Bank of China, the central bank, started regulating it in 1997, according to Moody's.