China is edging towards "financial calamity" and must wean itself off its debt addiction and reform if it is to avoid a crisis, the International Monetary Fund has warned.

Markus Rodlauer, deputy director of the IMF's Asia-Pacific department, said the world's second largest economy was approaching a tipping point where its rapidly growing financial sector and surge in shadow credit could undermine the state's ability to contain the fallout from a crash.

"The level of financial and corporate debt and the complexity of the financial system and rapid growth in shadow banking is on an unsustainable path," he said.