Admittedly, the US and Japan also have a debt problem. US debt to GDP ratio is 105.40 per cent, according to {非本站网址}. Japan's debt to GDP ratio is 250 per cent, reported Forbes.

These are large numbers, yet they are fairly accurate and well known. That means the debt prices and yields of the two nations fully reflect the risk premiums investors must receive in holding them in their portfolio.

However, this isn't the situation with China's debt. Officially, it is a small number: 47.6 per cent. Unofficially, it's hard to work out given that the government is both the lender and the borrower. One branch of the government lends money to another branch of government.

Government-owned banks, for example, lend money to state owned enterprises (SOE) and town village enterprises (TVE).

There are some unofficial estimates, including one from the Institute of International Finance (IIF) which place China's debt to GDP at 300 per cent.

Rising debt comes at a time the Chinese economy is expected to slow down. "Even without the trade war, we expect China's growth to slow down in tandem with a synchronised global downturn next year," says a recent BNP Paribas report. 

Worse, the government's role as both lender and borrower concentrates rather than disperses credit risks, creating the potential of a systemic collapse as the Greek crisis demonstrated.

Meanwhile, the dual role of government conflicts and contradicts with a third role - that of a regulator, the setting of the rules for lenders and borrowers.

And it complicates creditor bailouts in the case of financial crisis. Once again, Greece is a case in point. The reason why the "haircut" of Greek debt had such an immense impact on the Greek economy is that government-controlled banks and pension funds were the creditors of the general government and government-owned enterprises.

This means that the haircut shifted losses from one government branch to another, creating the need for new loans to cover the losses.

The situation could be more severe in China. The government simultaneously owns banks, pension funds and common corporations. Banks also lend funds to land developers. They are behind the country's "investment" bubble, one of the engines of the Chinese economy.

While the parallels between Greece and China's debt situation and financial structure are paramount, there's one big difference: China is huge compared to Greece. Therefore, if there's a financial crisis in China, the impact on the global economy will be huge, too.