According to Standard & Poor's, the rating agency has grown increasing concerns about the fast-growing types of shadow banking credit-non-bank-issued wealth management products.

These are issued by an array of non-bank actors such as local government financing vehicles, property developers and trust companies. The underlying assets can essentially be anything. The promised returns on these products (at around 10 percent) tend to be double those issued by the banks themselves, making them very attractive to investors.

And, critically, these products are sold through the (implicitly State-guaranteed) banks, just like the banks' own WMPs.

Certain components of the shadow-banking sector, notably trust companies, may prove to be the weak link in China's financial sector, according to Standard & Poor's.

"However, we expect the credit profiles of major banks that we rate to remain adequate this year," said Liao Qiang, an analyst with Standard & Poor's.

"In our view, the government's pragmatic approach to addressing shadow banking risks and fine-tuned policies toward refinancing of local government debt could temper any risk of severe credit losses," Liao said.

Yang also said the liquidity in China's banking sector remains healthy, based on several key indicators in the regulatory framework.

The real liquidity ratio, for instance, is close to 44 percent, much higher than the industry watchdog's requirement of 25 percent. And the loan-to-deposit ratio is 65.4 percent, lower than the ceiling of 75 percent required by the regulator, according to Yang.