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SERIOUS MONEY:THE STOCK market weakness of recent months has been widely attributed to the ongoing drama in the euro zone but the setback owes as much to concerns that China’s runaway property market is set to reverse direction and precipitate a sharp slowdown in economic growth.

The bears argue the Middle Kingdom’s inflated property prices are reminiscent of Japan’s real estate bubble during the latter half of the 1980s, and believe the Chinese authorities via accommodative monetary policy and a quasi-fixed exchange rate, are in danger of repeating the mistakes of their Japanese neighbours. Such an outcome would prove disastrous for the global economy, given that the developed world already stands on the edge of a deflationary abyss, but are the bears’ worst fears truly justified?