China's local governments have almost exhausted their annual quotas for new debt issuance in the first ten months of the year, with sales of bonds in the third quarter picking up sharply as part of the central government's effort to shore up the economy.

Issuance of new special bonds, targeted for specific funding needs such as land development, came to 1.32 trillion yuan in January-October, reaching 98 percent of the annual quota of 1.35 trillion, data from the finance ministry showed on Thursday.

New general purpose bond sales meanwhile stood at 798 billion yuan in the same period, accounting for 96 percent of the target set by the government for the year.

China has in recent months instructed local governments to accelerate these bond issuance in the face of a sharp slowdown in infrastructure investment, as many of them grapple with financing constraints brought on by a nationwide crackdown on speculative debt.

Total local government bond issuance was at 4.1 trillion yuan in the first ten months of the year, the ministry said in a statement posted on its website.

Outstanding local government debt reached 18.4 trillion yuan at end-October, the ministry added. China has capped outstanding local government debt issuance at 21 trillion yuan for 2018.

Some analysts remain unimpressed with overall credit growth, pointing to sharp cooling in October as a risk factor for the economy despite state efforts to ramp up fiscal supports.

"The upshot is that lower interbank rates and on-budget fiscal support have so far been insufficient to drive a sustained turnaround in lending," Capital Economics wrote in a note last week.

"With credit growth still cooling, economic activity looks set to come under further pressure in the coming months. We expect officials to step up policy easing in response, including benchmark lending rate cuts and off-budget fiscal stimulus."

In October, China's local governments issued 256 billion yuan ($36.94 billion) in debt, according to the ministry, down from 748.5 billion yuan in September and was the lowest since March. While the slowdown in bond sales was significant, it follows a historic pattern of a seasonal lull in the last three months of the year.

Outstanding local government special bonds reached 7.48 trillion yuan at end-October.

Local government debt swaps reached 148.3 billion yuan in October, the ministry said, compared with 44.1 billion yuan in September.