A major Asian investment bank says the seeds of a future financial crisis in China have been sown.

Nomura is warning that debt levels in China are teetering at unsustainable levels.

Debt in China is believed to be between 150 and 200 per cent of GDP, pushed up by easy monetary policy the government has used to foster economic growth, especially in the wake of the global financial crisis.

Nomura chief economist Rob Subburaman says there is a real risk China will repeat what happened in the US and Europe.

"When we compare China to other countries that have had crisis we would say that China is now in the danger zone in terms of debt," he told the ABC's Newsline program.

Mr Subburaman says the only way for the authorities to avoid a crisis is to ease stimulus and slow down the nation's growth.

"If it's not dealt with this year and policies remain easy I think it's a significant risk," he warned.

"I think the international experience now is littered with examples where if you have a quick run up in debt the effects on the real economy can be very severe."

Mr Subburaman believes Australia could be hit with the double whammy of falling commodity prices and a rising currency if the looming financial crisis in China materialises.

"The Australian dollar in recent years has become a safe haven currency and, if we see this China slowdown, we could see Asian central banks and sovereign wealth funds pour more money into Australia as a safe haven trade," he cautioned.

"So the Australian dollar could remain very strong despite commodity prices coming off, and that would be even worse for Australian exporters."