China may have $US1.3 trillion ($1.7 trillion) loans extended to borrowers that don't have sufficient income to cover interest payments, with potential losses equivalent to 7 per cent of the country's gross domestic product, according to the International Monetary Fund.

Loans "potentially at risk" would amount to 15.5 per cent of the country's total commercial lending, the IMF said in its latest Global Financial Stability Report. That compares with the 5.5 per cent problem loan ratio reported by China's banking regulator after including nonperforming and special-mention loans.

The true amount of bad debt sitting on the books of China's banks is at the centre of a debate about whether the country will continue as a locomotive of global growth, or sink into decades of stagnation like Japan after its credit bubble burst.

Official data released on Friday showed China's economy grew at its slowest pace in seven years in the first quarter. But indicators from the country's consumer, investment and factory sectors pointed to nascent signs the slowdown in the world's second largest economy may be bottoming out.