China will soon launch electronic savings bonds for the first time, adding a new instrument for the government to cover its budget deficit and fund public projects, the central bank said on Tuesday.

The government had set up a pilot computer system linking big commercial banks to allow individuals to purchase, manage and redeem the forthcoming savings bonds electronically, the central bank said in a statement on its Web site: (www.pbc.gov.cn).

The non-tradable bonds, to be issued by the Finance Ministry in the near future, would be sold to individuals at fixed coupons that would be exempted from interest tax, the statement said.

Chinese bank depositors are subject to a 20 percent tax on interest income.

China's state debt issues have racked up successive highs in each of the past few years as Beijing needed to cover its budget deficit, bankroll public projects and help laid-off workers.

China plans to issue around 800 billion yuan ($100 billion) in treasury paper this year, around 100 billion yuan more than the planned issuance in 2005, state media have said.

China has scrapped an annual quota for new government debt issuance and replaced it with a formula based on the outstanding level of public debt at any given time.