Recently, some experts have warned that China faces a financial/debt crisis worse than the 2008 US subprime crisis. But a closer look at the China's debt dynamics shows some fundamental differences between China's debt situation now and that of the US in the days leading to the 2008 global financial crisis.

The debt trends and problems in China may be worrisome, especially in the corporate sector, and the credit expansion is indeed fast. But that doesn't mean China is moving toward a financial/debt crisis.

It is true China's debt to GDP ratio is high at about 225 percent of GDP - the ratio is lower than some developed countries but higher than almost all developing countries. But the structure of Chinese liabilities appears to be safe. Debt denominated in foreign currencies is about 12 percent of GDP, dwarfed by China's foreign exchange reserves as well as assets held abroad. China also has a relatively big current account surplus. Therefore, the currency mismatch in debt position is not a problem for the country.