HONG KONG -- The former chairman of the U.S. Federal Reserve Ben Bernanke said on Tuesday that the world faced bigger problems than China's economic slowdown.

     "I don't think China's economic slowdown is that severe to threaten the global economy," said Bernanke at the Asian Financial Forum held in Hong Kong.

Ben Bernanke about to attend a session of the Asian Financial Forum held in Hong Kong on Jan.19 (Photo by Shinya Sawai)

     Bernanke's comment came just after the world's second largest economy said it grew 6.9% in 2015, marking its slowest pace in 25 years. The growth rate was just shy of the 7% target set by the Chinese government and prompted the International Monetary Fund to cut its worldwide forecasts for this and next year to 3.4% and 3.6% respectively.

     Bernanke argued that the global economy was more troubled by a global savings glut, which had long been a drag on investments. He also believed that China's growth deceleration was a natural outcome of the country's "necessary" rebalancing act.

     "China can't go on expanding at 10%," said the former Fed chairman, as the country transforms its economy from one that is reliant on manufacturing and construction to one that is driven by consumption and services. China's latest economic data showed a remarkable divergence in the expansion of the manufacturing and services sectors, with the former recording nominal growth of 0.3% and the latter 11.6%.

     Bernanke also said the $28 trillion debt pile facing China was an "internal" problem, given the majority of the borrowings was issued in local currency. According to consultancy McKinsey & Co., government, corporate, and household debt in China had already hit 282% of the country's gross domestic product as of mid-2014.

     Commenting on the yuan's recent volatility, Bernanke said its liberalization should ideally come when "the full infrastructure and the right preliminary" were in place, referring to a well-functioning capital market, a reliable legal framework as well as sound banking regulations. He also said that it was important for central banks to be accountable and transparent.

     Bernanke said the correlation between different markets is higher than that between markets and the economy. He pointed out that worldwide market selloffs in times of distress was natural due to global asset allocations. "The U.S. and China are not as closely tied as the market thinks," Bernanke said.

     Contrary to Bernanke's views on the global impact of a Chinese slowdown, the IMF said in its latest World Economic Outlook Update released on Tuesday that "a sharper-than expected slowdown in China" was a significant risk that would bring "international spillovers through trade, commodity prices, and waning confidence."