China has set new rules to curb risks at its policy banks, stepping up oversight of the country's financial system as Beijing looks to address a ballooning debt crisis that threatens the world's number two economy.

For the first time, the China Banking Regulatory Commission (CBRC) will impose specific rules designed in part to reduce financial risk at three banks tasked with funding Beijing's pet projects and supporting Chinese companies abroad.

The rules, released on Wednesday, include setting up mechanisms to make sure they do not lend more cash than they can afford as well as corporate governance provisions.

The new rules come as Beijing copes with ballooning debt that some analysts say threatens the stability of the Chinese economy.