China won't have its local government fail like Detroit, which has filed the largest ever US municipal bankruptcy, said Chinese think-tanks amid increasing concerns over local government's mounting debts and their ability to repay them.

China's audit office said local government debt totaled 10.7 trillion yuan ($1.75 trillion) as of the end 2010, while Standard Charter estimated the figure could hit CNY20trillion ($3.26trillion) at the end of 2012, roughly 38% of its GDP.

"Don't just look at figures of debts, look at real-value assets behind them," said Song Ping, deputy director at the National Development and Reform Commission (NDRC)'s economic research center, a Chinese government think-tank, said Thursday at a State Council briefing.

Detroit is in a different situation with local Chinese governments which have more high-quality assets, said Song, adding the Chinese growth, though with a slower pace, remains on an upward trajectory.

Song noted some local governments may face short-term debt repayment problems in the country's urbanization progress but chances of frequent risks or crisis remain low.

China's National Audit Office (NAO) Sunday ordered nationwide assessments of debts owed by all levels of governments as requested by the State Council, led by Premier Li Keqiang, underscoring the government's resolution to guard against potential risks.

Some Chinese local governments are likely to have higher debt risks as revenue from selling land slows and Local Government Financing Vehicles (LGFVs) face mounting pressures of repayment, said Wang Yiming, Vice President, Academy of Macroeconomic Research (AMR) at the NDRC.

Most of China's local government debt went into real assets like infrastructure and real estate instead of consumption, said Wang, adding a Detroit-like bankruptcy is not likely to happen in China.

Wang, however, acknowledged that the way governments borrow needs to be reformed.

"The best way to raise funds is not to borrow from banks, but to issue bonds, " said Wang, explaining bond sales are more transparent.

In early July, the Ministry of Finance (MOF) expanded a local government bond pilot program it first initiated in 2011, allowing two more provinces to join four local governments in bond issuance.

Local governments in China used to be banned from issuing bonds before the Ministry of Finance began to issue bonds on their behalf in 2009.