Reserve Bank governor Philip Lowe is concerned about China's debt levels and the potential for a major slowdown in its economy to affect Australia.
Dr Lowe told a parliamentary economics committee on Friday he didn't think China's economy would "fall off a cliff" next year but were long-held concerns about its medium-term stability.
"Each year we go along and I get more nervous about the medium-term risks," he told the hearing in Sydney.
"They were on a process of addressing the high debt levels, and then when growth did start to slow they went back to the old ways ... and that's kind of a vulnerability.
"That risk is out there and it's getting bigger and it's clear if it did materialise it would have a first-order effect on our economy."
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