Q&A: What lies ahead in 2015 for Chinese economy?

100 Yuan notes are seen in this illustration picture in Beijing in this November 5, 2013 file photo. [Photo/Agencies]

-- Is China heading for a financial crisis?

Some economists warned China faces mounting risks this year as growth sputters and deflation pressures prompt a surge in bad debt.

Financial system risks, if unchecked, could cause tremendous damage to Chinese economy.

The mix of slower growth and excess debt could prove "lethal" for the financial system, Bank of America Merrill Lynch said in its "To focus on the three Ds: Deflation, devaluation and default" report.

The bank said 2015/2016 could be dangerous, in terms of bad debt defaults and financial system stability, as the government finally moves to address tough issues, such as control on local government borrowing.

However, the report noted the government had unlimited resources to bail out banks and other organizations as the debts are mostly yuan-denominated, and the country's central bank can always print more money.