China is shaping up as favourite to fall victim to a major banking crisis, according to a dire and frightening warning from the Bank for International Settlements.The scale of China's debt is enough to create major markets shock around the world. Such an event would put Australia's economy directly in the firing line.

Making this view all the more formidable is the fact that the Bank for International Settlements which looks after the world's central banks and makes the rules on the strength of banks, has based its concerns on a fairly straightforward measure of the country's debt relative to the size of the economy.

Thus there are two problems. The first is that the economy's growth is slowing and the related problem is that the government has taken on debt in order to stimulate it.

Chinese have become addicted to debt and weaning off this stimulus will be painful.