The International Monetary Fund's Managing Director, Christine Lagarde, told a panel in Davos that the current slowdown in China's economy is "legitimate," but warned it could pose a major risk if the downtrend started to accelerate.
Speaking at the World Economic Forum (WEF), Lagarde said while China's slowing growth has been a concern, it looked to be under control.
"That the Chinese economy slowing down is fine. It is legitimate its is right and I think it is very much to be controlled by Chinese authorities," she told CNBC's Geoff Cutmore.
The Dow Jones Industrial Average sank 300 points on Tuesday after China reported its slowest economic growth in almost three decades. A long-running trade battle with the U.S. has accentuated fears that the world's second-largest economy could slow more than previously expected.
"Should the slowdown be excessively fast, it would constitute a real issue both domestically and probably on a more systemic basis," Lagarde added.
Also speaking on the panel was Hugo Shong, founding chairman of IDG Capital. His firm was the first global investment firm to enter China in the 1990s and an early investor of Baidu, Tencent and Xiaomi. Shong said he didn't currently have any real concern over China's cooling economy.
"Yes, in the past you were talking about 8 percent GDP (gross domestic product) growth. Now we have 6.6 percent and I think, given the size of the economy, it is a pretty good number," he said.