(Thumbnail image: Shanghaiist.com)

While much of the world has been in an economic slump, China’s economy continues to rise, with an estimated GDP growth of 10 to 12 percent. A stimulus package provided by the Chinese government, and an easy credit market have both led to a boom in China’s housing market.

Media sources examine whether China has created a housing bubble, and what will happen if it pops. 

Shanghai news Web site Shanghaiist.com points to possible cultural reasons as to why the real estate market is booming in China.

“Real estate is a tangible asset that many Chinese see as a safer option than keeping your money in the bank, or under your mattress.”

Perhaps seeing signs similar to those that preempted the collapse of the U.S. housing market, China has begun taking steps to slow down economic growth. On Bloomberg, Harvard economist Jeffrey Miron discusses whether the measures will be effective.

“I don’t think that what they’ve done so far is going to be nearly enough.  There’s still a huge amount of credit being provided.  There’s a huge amount of inducement for additional bank lending.  There’s still a general mentality that they want to promote home ownership...So I think there’s a definite bubble and it’s going to continue for a while unless the Chinese take much stronger measures.”

So, potentially, how big is the problem?  One analyst says it could be of epic proportions.  CNN compares the situation in China to another recent example of a real estate bubble collapse.

“Think Dubai, with its seven star hotel, indoor ski ramp, massive developments, and more recently a real estate bubble that burst.  The nature of our lending (is) not so different from sub-prime.  In such a short period of time you granted so many loans.  Did you do your homework?”

But investment analyst Marc Faber tells Yahoo Finance he’s not convinced of China’s so-called bubble, and explains the difference between China’s situation and that of the United States'.

“At least in China with credit they do something.  They build railroads and roads and bridges and infrastructure and education.  In the United States credit is mainly used for consumption, and that’s a huge difference.  Whether you use credit to make capital investments...or you use it to buy McDonalds hamburgers.”

In an opinion piece in The New York Times, Thomas Friedman cites two big reasons why he believes China’s economy will not crash.

“…it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us)…. Never short a country with $2 trillion in foreign currency reserves.”

In addition, one analyst says if there is a bubble, and if it pops, it may be akin to the tree falling in the proverbial forest.  FOX Business talks with economist Peter Dixon.

“In terms of any bubbles which may be about to pop there, I don’t think they will have significant consequences for the rest of the world, primarily because China’s equities are mainly owned by domestic investors.”

So do you think China’s bubble is about to burst, or is this just a case of over-speculation?

Writer: David Goldstein