To rebalance the economy, China must constrain real estate lending and overall liquidity. Policymakers are raising interest rates, making debt more expensive. They are requiring higher downpayments, forcing buyers to borrow less. These steps make sense. Also prudent is the central bank's decision to boost reserve requirements for lenders, which will rein in credit growth. To stem capital inflows and speculation, China is restricting property purchases by foreigners.

The question is not whether the government is using the right levers to control liquidity but whether they are pulling them hard enough. The voices of skeptics are growing louder, with many insisting that a collapse has become inevitable. If the property market seizes up, banks will experience sluggish loan growth and escalating defaults. Revenues will dive in such businesses as construction, development, steel, glass, and cement. Consumer confidence will erode. The entire economy will shudder. Construction has been powering much of China's expansion, and Harvard economist Kenneth Rogoff reckons GDP growth could sink to two percent without the current real estate buoy. A sharp slowdown in China could bring about a double-dip recession in the global economy, which would hurt China further in the form of lower exports. A bursting Chinese property bubble would certainly echo around the world.

Officials are hesitating to squeeze credit further for fear of going too far. They recognize that lowering the temperature of the property market will cool the whole economy. For two decades, the central government has fought to maintain at least 9 percent GDP growth. They have been spending and regulating to achieve that goal; however, reverse engineering like this poses risks. Markets do not perform evenly without considerable manipulation. Just ask Bernie Madoff, who struggled to uphold consistently high returns before resorting to a Ponzi scheme destined, inherently, to fail. Artificially propping up China's real estate sector may lead to a similarly spectacular failure. Policymakers must decide whether to accept slower growth now or risk a property-led recession in the years ahead.

By the time of the 2012 Spring Festival Gala, we may know whether the central government has the ability and resolve to steer the economy clear of trouble. If not, that year's crosstalk will not get as many laughs.

The author is a journalist and former Director at CB Richard Ellis, a global real estate services firm. You may reach him at jkuperman@yahoo.com

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn