Fitch Ratings warned Friday that China's growing debt could trigger "economic and financial shocks", but said it will maintain the country's A-plus rating with a stable outlook despite its concerns.
The announcement follows Moody's shock decision in May to downgrade the world's second-largest economy for the first time in almost three decades on concerns over its ballooning credit and slowing growth.
While China's external finances were robust and near-term growth prospects "favourable", Fitch said "large and rising debt levels" in its non-financial sector were a significant risk.
"Overall leverage in the context of continued adherence to ambitious GDP growth targets raises the potential for economic and financial shocks," it added.
Debt-fuelled investment in infrastructure and property has underpinned China's rapid growth, but there are widespread concerns that years of freewheeling credit could lead to a financial crisis with global implications.
Beijing has been clamping down on bank lending and real estate purchases but those efforts are complicated by the government's determination to meet its full-year growth target of around 6.5 percent.
That compares with last year's pace of 6.7 percent, which was the slowest in around a quarter of a century.
Premier Li Keqiang said last month that China could meet the target.
In a positive sign for China, capital outflows have "fallen sharply" since early this year and the current account -- a key gauge of the economy's health -- remains in surplus.
But Fitch said tighter monetary conditions could lead to slower growth next year of 5.9 percent.
"Macro-prudential regulations and tighter credit conditions will, in Fitch's forecasts, result in a slowdown in the housing sector and investment spending," it said.