Treasury Secretary Janet Yellen said the Biden administration is monitoring China’s real estate debt with the world’s most indebted property constructer in the world. China's second-largest property developer, Evergrande, owes more than $300 billion to creditors.

Appearing Sunday on CBS's "Face the Nation," Yellen was asked about fears behind a potential distribution to China’s economy if the debt cannot be controlled.

Anchor Margaret Brennan asked about a potential "Lehman Brothers moment." "How concerned are you about the risk to the rest of the world by what's going on inside of China right now? Are you confident China can control it?” Brennan asked the former Fed chair.

Yellen confirmed that China’s debt situation is something that is not being ignored but warns that it could cause possible “global consequences.” 

“Look, it's something that's important that we're monitoring closely. China has a real estate sector with firms that are overleveraged, and it's something that China is trying to deal with,” Yellen said.

“Real estate is an important sector of the Chinese economy. It accounts for about 30% of demand. And a slowdown in China, of course, would have global consequences. China's economy is large, and if China's economy were to slow down more than expected, it certainly could have consequences for many countries that are linked to China through trade,” Yellen said.

Brennan asked Yellen if the debt risk is something China can manage right now. “They're certainly trying to do that,” Yellen said.

The comments from Yellen come as U.S. President Joe Biden and China President Xi Jinping are set to hold a virtual summit Monday amid spiraling relations between the two sides.

"For Xi, his biggest vulnerability is on the economic front. That’s why Beijing has been signaling its interest in making progress on trade. Recent comments from Biden administration officials suggest there is interest in engaging on these issues, but again there are likely to be significant political constraints," Scott Moore, director of China programs and strategic initiatives at the University of Pennsylvania, told the Guardian.