Falling property prices in China and unregulated borrowing will have to be monitored closely to make sure it is not a risk to the world's second largest economy, the RBA says.
RBA governor Glenn Stevens says the Chinese economy is going along okay despite some volatility in monthly economic data.
"The real issue is the financial part of the economy," he said.
Mr Stevens is confident that as the Chinese government deregulates the banking sector, there will be less shadow banking.
Shadow banking is when some lending institution operate outside of the regulated banking system.
Mr Steven acknowledged that property prices in China were falling, which could be a risk to its economy.
"I cannot really say with any accuracy at all just how this will unfold," he said in Brisbane.
"This is an issue that authorities have been alert to for quite a some time."
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