Global sentiment towards China's economy and asset markets has turned from exuberance just a few months ago to overriding concern about the side-effects of last year's remarkable credit growth.

A number of commentators have warned of credit excesses and an overinvestment bubble, which they say could bring economic turmoil. Critics have also pointed to China's Rmb4,000bn ($585bn) stimulus programme and last year's 33 per cent surge in new bank lending as obvious hallmarks of excess liquidity and a lowering of lending standards. Some have raised concerns about hidden debt risks among local government investment entities, while media reports of Chinese “ghost cities” and empty commercial property are cited as evidence of local excesses.

The worst-case fears concerning the property market are based on a layer of truth and we have previously highlighted the untenable nature of price increases in some big cities, as well as the possibility that last year's boom was partly fuelled by misdirected bank loans. However, there are crucial differences between China's property markets and those of the US or Dubai.