The US Federal Reserve's (Fed) latest biannual Financial Instability Report, published earlier this week, warns of possible implications of China's real estate problems for the US financial system.

Tensions in China's real estate sector could put pressure on China's financial system, with possible consequences for the United States," it reads.

For the past few months, heavily indebted Chinese real estate developer Evergrande has rattled international investors as the company has sought to avoid tax defaults. Other Chinese contractors have also been struggling to pay off debt, adding to concerns of a further hit to the world's second largest economy - about a quarter of which is driven by real estate.

Among other things, the report pointed to the size of China's economy and financial system, and its international trade links.

For Wells Fargo Investment Institute's Director of International Market Strategy, Paul Christopher, the Fed's biggest concern is the slowdown in Chinese real estate activity, and the high level of contractor debt, and "some of them (like Evergrande) are diversified into other areas of the economy."

The analyst acknowledges that China can still do more to avoid a collapse in its real estate. Still, he does not rule out the possibility that China's expanded relations will induce a slowdown in worldwide real estate activity, which could ultimately lead to unemployment, falling Chinese stocks and deflation.

Previous Fed financial stability reports have mentioned China's high debt levels as well as "high real estate prices" as risks that could spill over to the US.

However, the difference in the latest Fed financial stability report, compared to previous ones, was the conclusion that China figured prominently among concerns about risks to U.S. financial stability.