Alfred Weidinger/Flickr Autonomous Research, the research firm focused on the financial sector, is warning of a ticking time bomb in China's shadow financial system.

In a new video, the firm, which employs Charlene Chu, dubbed the "rock star" of Chinese debt analysis, said China's lenders piled up debt and repackaged much of it in the form of wealth-management products and asset-management plans.

By the end of 2016, WMPs and AMPs together amounted to 51% of China's gross domestic product, according to Autonomous Research.

"WMPs and Chinese banks more generally have become so large and complex that any major problems could be just as destabilizing to the global economy as what occurred in 2008," the video said.

China has shown signs it is aware of the risks that shadow banking presents. In a recent interview with Bloomberg, Chu said Beijing had shown a "surprisingly high appetite for pain" while trying to curb some of the more egregious shadow-banking practices.

Here's the video explaining shadow banking in China:

China’s Shadow Finance System: Behind the Curtain from on Vimeo.



And here's a step-by-step explanation of the video: