A senior policy maker stressed Thursday China should continue its deleveraging process this year, while highlighting the necessity of tackling obvious yet easy to neglect dangers in the economy.
"The course of deleveraging can not be altered," Yang Weimin, deputy head of the Office of the Central Leading Group on Finance and Economic Affairs, the country's top economic policy-making office, said at a press conference.
High leverage is "the source of risks" and authorities should not allow the economy's leverage ratio to climb further for the sake of supporting growth, Yang told reporters.
He named several areas where systemic risks could arise from, including interbank investment and financing, local government debt and state-owned enterprise (SOE) debt, calling for early measures to deal with them.
Left unaddressed, those problems could cause greater damage to the economy, Yang warned.
The relationship between supporting growth and preventing risks must be well handled, even if that means other goals would be compromised, he said.
He also noted that deleveraging and growth could be achieved at the same time, as demonstrated by China's economic performance in the first half of the year.
China's quarterly GDP growth increased from 6.8 percent in the fourth quarter of 2016 to 6.9 percent in the first two quarters of this year while the country imposed tighter controls on debt and financial activities.
China has put deleveraging of SOEs high on its agenda, according to a key national financial work conference earlier this month.
SOEs are responsible for about 60 percent of the country's total corporate debt, according to a report from the National Institution for Finance and Development.
The SOEs' high leverage is also among several "grey rhinos" that China should watch out for, Yang said, referring to high-impact, highly probable yet neglected threats to the economy.
Unlike "black swans", which are unpredictable incidents, "grey rhinos" are big problems with signs but often draw inadequate attention and lead to serious consequences.
Authorities should comb through such "grey rhinos", which also include shadow banking, real estate bubble, local government debt and illegal fundraising, and take effective measures to address them in accordance with their gravity and urgency, Yang said.
In the second half of the year, China will defuse local government debt risks in a proactive and steady manner, advance financial regulation, stabilize the property market, and support foreign investment inflows and private investment, he said.