As the treasury bonds issued in 2007 will mature on Aug. 29, the MOF will issue another 600 billion yuan to banks, including 400 billion yuan of seven-year bonds and 200 billion yuan of 10-year bonds, with market-based yields, the MOF said in a statement.

The special issue will not impact liquidity in the financial markets and banking system, the People's Bank of China (PBOC) said in a statement.

While the MOF will issue bonds in the primary market, the central bank will buy the special bonds in secondary market, so that the total debt level and the balance sheet items of the central bank will remain stable, said Xu Zhong, an official with the PBOC.