"The level of financial and corporate debt and the complexity of the financial system and rapid growth in shadow banking is on an unsustainable path," he said.WSJ: Chinese Consumers Could Feel Pinch of Debt
"While still manageable in its size given the size of the public assets under public control, the trend is dangerous and if it's not corrected it will lead to a correction.
"The longer it lasts ... the more serious the disturbance and the disruption might be. [The reaction could range] from a mild growth slowdown, to a sharp slowdown in growth to potentially a financial crisis."
Households, the least indebted part of the economy, are increasingly doing their part to accumulate debt. That is particularly true when it comes to the booming housing market. Credit growth in the economy broadly has been strong this year, it has been particularly so for mortgages.
Nearly a quarter of all mortgage debt outstanding in China was taken out in the past 12 months. Peer-to-peer lenders have also flourished, anecdotally helping home buyers with purchase deposits and down payments. The auto market, which has boomed this year, is also increasingly relying on finance to fuel sales.