SHANGHAI, Jan 14 (Reuters) - Chinese leader Xi Jinping has ordered the military to choose domestic brands when procuring vehicles, part of a broad effort to reduce costs and buy locally produced goods, state media reported.

The decision, contained in a circular issued late on Monday, follows a ban in April on the use of military licence plates on luxury cars, most of which were foreign brands.

Mr Xi, who became Communist Party chief in November 2012 and also serves as president and top military leader as head of the Central Military Commission, has launched a government-wide drive to encourage frugality and fight corruption.

Government officials have already been urged to drive home-produced brands, such as Red Flag, challenging Audi, the Volkswagen-owned brand that has dominated the government market for 20 years. The Foreign Ministry has said that minister Wang Yi is now chauffered in a Red Flag H7.

The circular, approved by Mr Xi and issued by the People's Liberation Army's staff headquarters as well as the political, logistics and armament departments, said funds used by the army should be strictly regulated and the budgeting processes improved, the state-run Xinhua news agency said.

The purchase of new military cars should be arranged through a centralised system, it said. The document was "aimed at promoting frugality and cutting down on waste in military and armed police forces".

In line with similar calls to directed at government officials, it urged strengthened supervision over spending and banned "personal banquets financed with public funds".

The circular also banned giving or accepting money, securities, souvenirs and local products and called for strict controls on celebrations, forums, exhibitions and performances.