A photo of the People's Bank of China.

The People’s Bank of China, located in Beijing.
Photo credit: testing / Shutterstock

Ken Rogoff, former chief economist of the International Monetary Fund, believes that China’s economy is slowing down much faster than official numbers are showing. In an interview with BBC News, Rogoff stated that China’s slowdown is the greatest threat to the global economy. Analysts are particularly concerned with the country’s rising debt problem.

“If you want to look at a part of the world that has a debt problem, look at China. They’ve seen credit fueled growth and these things don’t go on forever,” Rogoff stated.

Just last week, the Bank of International Settlements reported that China’s credit to GDP gap was at 30.1%. Credit to GDP gaps measure the amount of debt a country is in compared to its annual growth. The Financial Policy Committee of the Bank of England deemed China’s percentage “very high by international standards.”

The recent report is causing quite a scare in the U.K., where British banks have an estimated $530 billion invested in China. That figure comprises about 16% of all foreign assets owned by U.K. banks.

“There’s no question that China’s the greatest risk. China’s been the engine of global growth,” Rogoff stated.

But the U.K. won’t be the only region affected; the U.S. can expect to take a hard hit if China’s credit bubble bursts. Rogoff, who now teachers at Harvard University, also touched on how the U.S. presidential election leaves a lot of uncertainty as far as next steps go.

“I don’t like the trade policies of either candidate. I think free trade has benefited the States immensely in its leadership position. So watching as an economist, this has been a painful election. I am certainly nervous, probably much more about a Trump victory, just because of not knowing what’s next.”

But Rogoff was also quick to note that there’s also a lot of uncertainty in the U.K. with the recent Brexit decision. Analysts aren’t quite sure how that will impact future trade commissions.

What analysts do know is that if China suffers a recession, its rippling effect will be felt around the world.