U.S. investor fears “are vastly overblown” that China’s economy will crash, says economist Stephen Roach of Yale University.

Roach, a senior fellow at Yale University and former Morgan Stanley non-executive chairman in Asia, told CNBC that while growth in China has slowed, the economy is “not going in for a crash … and that will present, I think, an opportunity for shares to re-evaluate the China threat, big time."

"They did not do a great job of handling the equity market bubble on the upside by encouraging it and fighting it on the downside," Roach said.

He played down last month's devaluation of China's currency, saying the more important development there has been the progress in transitioning from an export-led to a more consumer-led economy, CNBC reported.

"Structural change ... is very, very hard to do and normally takes a much longer period of time," he said.

"The world has relied on China as its major engine of global growth," so the slowdown is a global economic danger.

Meanwhile, China's economic slowdown could hurt the world economy but won't trigger a global financial crisis since its market is fairly detached from other financial markets, Bank of Japan board member Takahide Kiuchi said on Thursday.

"I'm not worried about the possibility of a China-driven global financial crisis," Kiuchi told a news conference after meeting with business leaders in Aomori, northern Japan, Reuters reported.

"Monetary conditions are pretty accommodative globally ... With China's property market showing signs of a pick-up and authorities showing readiness to take policy measures, I expect the economy to stabilize over the course of time," he said.

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