China has approved government-backed financing vehicles and constrution companies of affordable houses to issue corporate bonds as a method to fund affordable housing projects, according a notice issued by the National Development and Reform Commission (NDRC) to local governments, the Shanghai Securities News reported Wednesday.

"Corporate bonds has the advantages of low interest rates and long-term duration, therefore are good financial tools for fund-raising of affordable houses," said the NDRC in the notice.

Analysts believe that this move will break the financing bottleneck of the country's affordable housing and expect investments and construction of affordable houses to accelerate in the third quarter.

The notice also said that funds raised through corporate bond issuance should give priority to affordable housing projects. Only when affordable housing projects are completed, can these funds be used for other projects, the NDRC said.

Chinese Vice Premier Li Keqiang recently emphasized that affordable housing projects can not only benefit the public, but also increase effective housing supplies and curb surging housing prices. Affordable housing is also beneficial to optimize investment structure, expand domestic consumption and promote the development of relevant industries.

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