There is growing evidence to suggest that a dangerous housing bubble is brewing within China's economy. Recent research by a Japanese scholar shows that China's urban land is now valued at a combined 265 trillion yuan ($43.3 trillion), roughly six times the country's GDP last year. Under normal circumstances, land prices should not exceed GDP by more than a factor of two. And when Japan got hit by its own financial crisis, its land was worth four times GDP.

Many have warned of the threat lurking just under the surface of China's housing market. But none of the warnings have been taken seriously. By and large, Chinese "experts" deny the existence of a bubble altogether, saying the market has plenty of room to expand further. Meanwhile, the government still lacks the resolve to control land prices. In some cities, the property market accounts for over 80 percent of the local economy.

Few are willing to face reality because everyone, in one way or another, is a stakeholder in the housing market.

Base on an editorial from the International Finance News.