China's central bank has warned in the clearest language to date that extreme credit creation and trouble in the shadow banking system could lead to a full-blown financial crisis.

Zhou Xiaochuan, the governor of the People's Bank (PBOC), spoke of "fierce market reactions" and possibly a Minsky Moment, the tipping point when credit cycles break and euphoric booms collapse under their own weight.

It had long been assumed that this particular form of crisis cannot happen in a state-run financial system where the banks are under Communist Party control.

Mr Zhou told China Daily that asset speculation and property bubbles could pose a "systemic financial risk", made worse by the plethora of wealth management products, trusts, and off-books lending.