China's developed regions have higher debt levels while western and central regions have seen faster debt growth, a report by a domestic rating company showed, and analysts said the situation reflects China's economic transition.

A report published on Thursday by China Orient Asset Management Co, a domestic credit rating institution, ranked 31 provincial-level governments' debt situation from three angles: economic strength, fiscal condition and debt burden.

The rankings can be used as a reference by policymakers and investors, according to analysts.

South China's Guangdong Province was ranked first in economic power, while Northwest China's Qinghai Province was last.

In general, provinces, municipalities and regions in East China had higher ranks.

The struggle of Qinghai Provincial Investment Group, a state-backed borrower, to pay bond interest and principal during the past two weeks aroused concern among its investors.

East China's Jiangsu, Zhejiang and Shandong provinces, North China's Beijing Municipality, and Southwest China's Sichuan Province saw higher debt levels.

Southwest China's Tibet Autonomous Region, Central China's Hubei and Hunan provinces, and East China's Jiangsu and Zhejiang provinces saw faster debt growth.

China, which is strictly reining in financial risks including local debt, has relaxed its limits on local debt growth this year to give local governments more scope to stimulate investment to stabilize the national economy.

Last December, the National People's Congress authorized the State Council, the cabinet, to announce a 1.39 trillion yuan ($207 billion) upper limit for local debt growth in 2019.

The figure includes a 580 billion yuan limit for general debt and 810 billion yuan limits for special-purpose debt, according to the NPC's official website npc.gov.cn.

Unlike previous years, China started local-debt issues in January and February. According to the Securities Daily, 418 billion yuan of local bonds were issued in January, including 369 billion yuan in new debt.

As 2020 nears, which is the target to fully build a moderately prosperous society in all respects, China will secure economic growth by stimulating local governments' investment, which will lead to higher debt, Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Sunday.

"Local debts are expected to grow this year... especially special-purpose bonds to provide funding support for important infrastructure projects," Dong said.

"Local debt has been regulated in recent years, and more flexible policies are expected to be seen in the future."

The report showed that Beijing had the highest implicit: explicit debt ratio of 6.2, followed by Jiangsu with 4.4 and North China's Tianjin Municipality's 4.3. Implicit debts are the local debts that exceed the legal upper limit of local debts. In many cases, local governments promised to payback with fiscal funds or offer bailouts.

To prevent financial risks, it's important to separate implicit debt from local government debt, and local governments should not bail out implicit debt, because doing so would have the most side effects, said Liu Shangxi, the director of the Chinese Academy of Fiscal Sciences, according to the Security Times on Saturday.

The goal "is not to eliminate debt, but to control the debt at an appropriate level," Liu said. Local governments can't be debt-free - the key is that the debt should be moderate, used well and generate benefits. Only in this way can the risks be under control.

Among the 31 regions in the list, Tianjin was surprisingly near the bottom next to Qinghai.

According to analysts, Tianjin's situation shows how local governments are struggling in the nation's economic transition while coping with financial risks at the same time.

Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Sunday that in terms of debt growth, local governments should be more prudent and "live within their means".

"New growth momentum needs time to develop. Those areas whose new capacity develops the fastest, will cope with the debt risk better," Cong said.