GOVERNMENT cadres will not be allowed to ''moonlight'' and trade in stocks and may face prosecution for corruption under a new set of rules recently issued by the Sichuan government and the provincial Communist Party. Cadres who were found to have violated the 14 new articles would face party discipline and serious offenders would be prosecuted, the official China News Service said yesterday. The agency said the new rules were the result of three new decrees laid down by Sichuan Governor Xiao Yang early this year. Under the new ''code of conduct'', government cadres in Sichuan would not be allowed to take up ''second employment'', and they would be punished for using public property such as telephones and vehicles for personal use. However, cadres would not be reprimanded for contributing articles to magazines and newspapers, and would be allowed to accept payment for their efforts. The new rules also provided specific guidelines on stock trading. They made it clear that cadres were not allowed to trade in stocks - not even through their families and friends. Cadres found to have traded in stocks with public funds would be ''severely'' dealt with and insider trading was strictly prohibited. Although Sichuan has no official stock exchange, numerous ''shadow stock exchanges'' have been formed in major cities in the province, where investors trade the internal shares issued by state-owned and collective enterprises. The new rules said that cadres who demanded bribes in the form of ''overseas inspection tours'' or expensive household appliances would face harsh punishment from the authorities.