Australia's central bank chief warns over China debt risk

Australia's central bank chief has warned China's mounting debt poses a grave economic threat, with broadening trade ties between the two countries exposing more industries to the risk.

Total debt has ballooned in China from 100 percent of gross domestic product (GDP) in the late 1990s to about 260 percent, with authorities seeking to boost credit and stimulate the economy since exports slowed during the global financial crisis.

China is Australia's largest trading partner, accounting for close to a third of its exports and about one fifth of imports, and Reserve Bank of Australia chief Philip Lowe is worried.

"Among the largest economic risks that Australia faces is something going wrong in China," he said during a speech in Sydney on Wednesday evening.

"And perhaps the single biggest risk to the Chinese economy at the moment lies in the financial sector and the big run-up in debt there over the past decade."