BEIJING -- Chinese stocks closed higher on Friday, with the benchmark Shanghai Composite Index up 0.98 percent to finish at 3,617.32 points.

The Shenzhen Component Index went up 0.93 percent to close at 12,544.45 points.

The ChiNext Index, [Hong Kong Company Formation]tracking China's Nasdaq-style board of growth enterprises, gained 1.37 percent to end at 2,213.77 points.

Related: Stocks surge to highest since 2008

Chinese stocks rallied to the highest level since April 2008, led by gains in steel and advanced industry sectors, as signs show that the Ministry of Finance is moving to rectify trillions of yuan of entangled local government debt.

The benchmark Shanghai Composite Index surged by 2.13 percent to close at 3,577.3 on Wednesday. The gauge has gained about 76 percent during the past 12 months.

Steel stocks led the rally, with Valin Steel, Bao Steel, Fangda Steel and Daye Special Steel jumping by the daily limit of 10 percent.

The Shenzhen Component Index jumped 2.68 percent to 12,496.24, while the CSI 300 Index added 2.37 percent to 3,846.05.

Smart TV manufacturers, including TCL and BOE Technology Group, gained 10 percent. Hisense and Sichuan Changhong rose 9.7 and 6 percent respectively.

High-tech industry sector remained bullish on Wednesday, as digital machine tool manufacturer Yawei Group jumped by the daily limit, and Qinchuan Machine Tool Group and mobile antenna company Shenzhen Sunway Communication by more than 5 percent.

Trading in Shanghai and Shenzhen bourse climbed on Wednesday and amounted to 617.4 and 504.5 billion yuan respectively.

The Ministry of Finance earlier announced that it issued rules on general local government bond issuance (GLGB) [Company Registration in USA]on Mar 12. Combined with the pilot program launched last year that allowed 10 municipals to officially issue GLGBs, the moves aim at lessening the liquidity pressure among regional governments and enhance transparency in fiscal budget.