China has a huge debt problem, warn UBS analysts.

Chinese central government debt equaled 15 percent of the economy, and government debt including central and local governments and agencies equals 55 percent of the economy. All together, government, corporate and household debt amounts to over 200 percent of the nation's gross domestic product.

"Should we worry about China's debt problem?" asked UBS analysts in a research note, according to CNNMoney. "The answer to that question is a definitive yes."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

China opened the floodgates of liquidity during the financial crisis of 2008, financing massive amounts for a wave of construction projects. The lending boom was instrumental in helping China largely avoid serious economic damage from the crisis that brought a recession to the United States.

Still, economic growth has slowed from about 10 to 8 percent despite the massive stimulus. Analysts worry that growth may not be robust for local governments to repay their large debt loads.

"It seems credit growth has become less effective in generating growth," the UBS economists noted, CNNMoney reports.

Unregulated lenders, in the so-called shadow-banking sector, are increasingly dominating credit. And local government finances are opaque, especially when it comes to their relationships with private companies. The central government may at some point be forced to rescue debt-burdened local governments.

Chinese officials are trying to get a handle on the problem, according to China Daily.

The State Council, or China's cabinet, is pressing for increased oversight and protections against local government debt risks. The China Banking Regulatory Commission (CBRC) has warned lenders to scrutinize loans to local government financing vehicles (LGFVs) that local governments use to invest in infrastructure and other projects.

"Solvency is now in focus and it doesn't matter much whether it's an LGFV or not," Yang Kaisheng, president of the Industrial Bank of China, told China Daily.

Both Moody's and Fitch Ratings downgraded China in April because of concerns about large debt loads. "Progress has been less than anticipated in making local government contingent liabilities more transparent and reining in rapid credit growth," Moody's stated in its report.

Barclays Capital said that the central government owes 7 trillion to 8 trillion in yuan to creditors, and local governments are over 20 trillion in debt. However, the National Audit Office (NAO) says total local debt is 10.7 trillion yuan.

"The Barclays data are groundless," Dong Dasheng, NAO deputy auditor-general, told China Daily.

Editor’s Note: Put the World’s Top Financial Minds to Work for You