US-based ratings agency, S&P Global Ratings in a report released last week warned that China is at a risk of losing its AA-status if it doesn't rein in its debt-fueled economic growth. S&P's has slashed China's outlook to negative from stable in March. And a further downgrade will be a major blow to the world's second-largest economy.

"Credit growth in China continues to outpace income growth, and much new lending appears to be financing public investment," S&P analysts Kim Eng Tan and Xin Liu wrote. "Consequently, we see support for the Chinese sovereign ratings gradually diminishing."

Data released by the People’s Bank of China earlier this week showed that China’s new loan growth surged 29 percent on month in September as China’s banks extended 1.22 trillion yuan (US$181 billion) in net new yuan loans in September, compared to 948.7 billion yuan in August.

That said, the US-based ratings agency, S&P published its latest report on the Chinese banking sector, concluding that China bank's financial stability is not under immediate threat. The International Monetary Fund (IMF) has early this month warned that risks to financial stability are growing.    

S&P's statement follows Moody's rating actions on nine Chinese banks on 17th October. Moody's notes increasing pressure on these banks' standalone creditworthiness owing to growing risks in their funding profiles, and increasing asset quality pressure, as reflected in their latest full-year 2015 and half-year 2016 financial results.

The assessment followed Moody's change of the Macro Profile for China to "Moderate" from "Moderate +" in March 2016 which implied downward pressure on the standalone profiles of Chinese banks. The Macro Profile change reflected the continued rise in leverage in the Chinese economy from an already high level.