China will fend off risks from excessive optimism that could lead to a "Minsky Moment", central bank governor Zhou Xiaochuan said on Thursday, adding that corporate debt levels are relatively high and household debt is rising too quickly.

A Minsky Moment is a sudden collapse of asset prices after a long period of growth, sparked by debt or currency pressures. The theory is named after economist Hyman Minsky.

Zhou's warnings of potential risks facing the world's second-largest economy contrast with the rosier views of most Chinese officials.

"If there are too many pro-cyclical factors in the economy, cyclical fluctuations are magnified and there is excessive optimism during the period, accumulating contradictions that could lead to the so-called Minsky Moment," Zhou was speaking on the sidelines of China's 19th Communist Party congress.

"We should focus on preventing a dramatic adjustment," he said. China will control risks from sudden adjustments to asset bubbles and will seriously deal with disguised debt of local government financing vehicles, Zhou said.

Still, China's overall debt levels could decline as long as authorities keep a tight control on credit, he said.

Worries about a rapid build-up in China's debt prompted S&P Global Ratings to cut China's sovereign credit rating last month, following a cut by Moody's in May.

China's finance ministry said S&P's downgrade was a "wrong decision".

The International Monetary Fund IMF said in August it expected China's total non-financial sector debt to rise to almost 300 percent of its gross domestic product (GDP) by 2022, up from 242 percent last year.

When asked whether he would retire this year or next, Zhou said: "Either way it'll be soon." The 69-year-old Zhou, the country's longest-serving central bank chief, has spearheaded financial reforms and boosted the yuan's global profile.

Sources told Reuters earlier that Zhou was likely to retire around the time of the annual session of parliament next March, and China's top banking regulator Guo Shuqing and veteran banker Jiang Chaoliang are front runners to succeed Zhou.