Beijing: China's financial system was facing higher risk than that of the US before the global economic turmoil a decade ago, former finance minister Lou Jiwei has said.
China's financial system had become "severely distorted", Lou said while speaking at Forum in Beijing recently.
The "likelihood of China generating systematic financial risks is pretty big", the Hong Kong-based South China Morning Post on Tuesday quoted the 68-year-old leader as saying.
The distortion was exemplified by the high cost of financing in China despite the loose monetary environment, Lou said.
"Compared to the US financial market 10 years ago, (when) the risk and return on derivatives were defined and the products were registered (with regulators), China's (financial market) is more messy," said Lou, who was the finance minister during 2013-16.
"The real risks and returns can only be determined after looking into the underlying assets," Lou, who is currently the Chairman of the China s National Social Security Fund, said.
Lou, who helped shape China's economic reforms, has been an outspoken figure since leaving the main policymaking arena and is generally regarded as a reformist.
"China's ratio of M2 (a broad measure of money supply) to gross domestic product has surpassed 200 per cent, which is more than twice that of the US, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US," he said.
According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan ($26.5 trillion) or 203 per cent of China's nominal GDP in 2017.