China's huge debt levels will weigh on growth over the next five years and could threaten the country's financial stability unless policymakers rein in credit, Fitch has warned.

The rating agency said a "remarkable build-up in leverage across China's economy" since the 2008 financial crisis meant Beijing's ability to meet ambitious annual growth targets of 6.5pc to 7pc between 2016 and 2020 looked "extremely challenging".

While China's public debt ratio stood at 55pc of gross domestic product (GDP) at the end of last year, total credit in the world's second largest economy, excluding equity raising, climbed to almost 200pc of GDP in 2015, from 115pc in 2008, according to official estimates.

Fitch said the "true figure" was likely to be closer to 250pc. It expects this to climb to 260pc of GDP by the end of this year as total debt continues to grow faster than the economy.

"High and rising leverage in the economy is a mounting source of systemic vulnerability," Fitch analysts wrote in a note.

"The longer the economy's indebtedness goes on rising, the greater the difficulty of unwinding it, and the higher the risk of a shock to economic and financial stability."

Fitch's warning came just days after the International Monetary Fund warned that negative growth surprises in China could trigger a global market rout.