Debt crisis unlikely in China: economist

China has the capability to solve its debt problems and a crisis is unlikely, a prominent economist said Wednesday.

China's overall debt is not excessive compared with other countries and its government debt is controllable, said Li Yang, head of the National Institute for Finance and Development (NIFD), a government think tank.

The country's debt totaled 168 trillion yuan (27 trillion U.S. dollars) at the end of 2015, 249 percent of GDP, Li told a press briefing.

A debt crisis is a "small probability" and the country has enough sovereign assets (28.5 trillion yuan in 2014) to cope with debt risk, Li said.

"Even if any defaults happen, we can address them in an orderly way without a major impact on the national economy," he told reporters.

China's government debt reached 26.7 trillion yuan, 39.4 percent of GDP, at the end of 2015 reaching 56.8 percent if the debt of local government financing vehicles is taken into account, according to the NIFD.

The level was below the European Union's alert line of 60 percent and dwarfed by that of many other economies, Li said, noting that the ratio of government debt to GDP exceeds 120 percent in the United States and stands at 200 percent in Japan.

Moreover, most money borrowed by local governments was spent on projects that can generate profits to pay back the debt, Li explained.

He also believes China's huge bank savings, at about 50 percent of GDP, also serve as a liquidity buffer.

Li said more needs to be done to tackle the debt of non-financial companies, which accounted for 156 percent of GDP at 2015 end if state-owned enterprises (SOEs) are included. Most corporate debt was related to SOEs and faster SOE reform will help the situation.

He also stressed the importance of coordinating government departments in defusing debt risks. Endi