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BEIJING, April 28 (Reuters) - China must act cautiously in cutting leverage ratios in the corporate and government sectors, as any abrupt move could deal a blow to an economy that is already slowing, a senior central bank official said in remarks published on Monday.
Xu Nuojin, a deputy director of the statistics department of the People's Bank of China, said the slowing economy could expose the property sector and local government financing vehicles to high risks, potentially becoming the biggest concern for world's second-largest economy.
"On the one hand, we must be highly vigilant on high leverage ratios, while on the other hand we must avoid simply taking blind measures to cut leverage," he said in an article published in the China Securities Journal.
"We should solve the high leverage ratio problem in a gradual and healthy way, including by maintaining sustainable economic growth."
China has seen a rapid build-up of debt in recent years, especially following an investment spree driven by a 4 trillion yuan stimulus package in the wake of the 2008-09 global financial crisis.
The total credit to GDP ratio reached 215 percent at the end of 2013, according to figures from Standard Chartered. The high credit-to-GDP ratio is widely seen as increasing financial sector risks.
Concern about the huge growth in Chinese corporate debt since the global financial crisis has intensified this year as the government allows market forces to play a bigger role in deciding winners and losers.
The central bank's governor, Zhou Xiaochuan, had said earlier this month that the government must not lower its guard against the risks of high leverage in the corporate sector.
Latest data from the National Audit Office showed local governments had total outstanding debt of 17.9 trillion yuan ($2.86 trillion) at the end of last June, leaving the country with total government debt of around 58 percent of gross domestic product. ($1 = 6.2536 Chinese Yuan) (Reporting by Aileen Wang and Koh Gui Qing; Editing by Shri Navaratnam)