China banking worries 'way overblown': Wilbur Ross
Investors should set aside worries about China's ongoing credit troubles and put more money into into the fast developing economy, veteran investor Wilbur Ross told CNBC on Monday.
"China is getting very close to the point where one should be making more commitments to it," Ross said on "Squawk Box." "I think it's true that they're slowing down, but by global standards they're doing very, very well."
Earlier Monday, a Chinese trust firm announced an agreement with investors in a troubled high-yield investment product, narrowly avoiding a precedent setting default. The high-yield trusts are part of what has been described as China's "shadow banking" network. Ross, however, said fears over China's financial system remain "way overblown."
Ross maintained that China held an enviable gross domestic product among the world's big economies. He said the country's powerful central bank has enough resources to combat problems with the high-yield trusts as it moves away from an export- and investment-driven economy to a consumer-driven system.
(Read more: China shadow bank says reached pact to avoid default)
"I don't think it should be too surprising that it's not a seamless movement away from one set of dynamics in your economy to a fairly different one," Ross said. "You have to assume there'll be some little rough spots in between."
Others remain more cautious about China's prospects.
Boris Schlossberg, a managing director at BK Asset Management, believes the biggest risk to global markets comes from Chinese wealth-management products such as the high-yield trusts. He said Chinese banks are trying to avoid a "Lehman" moment, referring to the collapse of the Wall Street investment bank that precipitated the Great Recession.
"They're afraid of letting one of these things go and then everybody else in China starts to run for the exits and that creates a tremendous security problem for the rest of the world," Schlossberg told CNBC.
(Read more: Is China really running out of cash?)
China has to inject risk into its banking system in order to quell ongoing concerns over its credit markets, said Leland Miller, author of the U.S.-based "China Beige Book," an accounting of Chinese economic activity similar modeled after U.S. Federal Reserve's own publication.
Miller told CNBC that the Chinese credit transmission mechanism has been broken for the past few quarters, and that central bankers there will have a hard time trying to resolve the situation.
(Read more: Are China's shadow banking woes exaggerated?)
"How do you do that while punishing intermediaries and teaching investors a lesson?" Miller asked on CNBC. "What you're probably going to have to do is slowly pull away the lemonade. This is a very difficult thing to do. … We have come out very decisively over the past few quarters and said the credit transmission mechanism is dead."
John Rutledge, the chief investment strategist with Safanad, said Monday that China has a "structural" problem when it comes to the high-yield trusts. They don't carry any risk, and they've become the credit source of choice among smaller companies that can't secure capital from large Chinese banks, he said.
"The ways they've gotten [capital] is through these trust companies but also through these black market loans," Rutledge told CNBC. "And finding a way to feed those companies' working capital in a steady way is what China really needs to in order to guarantee long-term stability."
The troubles within Chinese credit markets, and the ripple effects in the U.S. stock market, are a sign of investors' "unwinding" positions in light of potential higher U.S. interest rates, Rutledge said.
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen. Reuters contributed to this report.