Stress tests have been carried out on China's banks, to see how well they'll be able to survive a drop in property prices. The results found that most can tolerate a drop of between 30 and 40 percent.

China's major state-owned commercial banks, the Industrial and Commercial Bank of China and the China Construction Bank have proven they'll be ok if housing prices drop by 35 percent.

Stress tests revealed the Bank of Communications could tolerate a dip of 30 percent. While the Agricultural Bank of China could take a 20 percent downturn.

Of the major state-owned lenders, the Bank of Communications was first to publicize how it could handle the pressure of tightened lending policies.

The test showed the bank's bad loan ratio would rise 1.2 percent if housing prices dropped by 30 percent. But the lender says it can manage the risk because mortgage loans, make up a small part of its portfolio.

China Construction Bank says it would feel the impact the same as the Bank of Communications, if property prices dipped 30 percent. It's more optimistic about the rising bad-loan ratio because it says it has been strict on offering mortgage loans for properties.

ICBC, the biggest lender in China, also says the risk of falling property prices could be kept under control.

For the joint-stock banks... Minsheng Bank can withstand a 40-percent drop, the highest tolerance of all the lenders.

China Merchants Bank took into consideration the possible property possession tax. According to its calculation, the impact would be a 0.8 percent rise on the bad-loan ratio... if the tax rate is 1 percent and the number of home-owners who possess three properties makes up 30 percent of its total mortgage clients.