BEIJING - Economists from China's leading think tanks have dismissed predictions that a possible property meltdown would trigger a crisis or even a crash in the world's second largest economy.

"It can be said that China's property bubbles are now the biggest risk in its economy, but bearish talk of a collapse of the whole economy smells of ulterior motives," Wang Xiaoguang, a researcher at the Chinese Academy of Governance, told Xinhua.

Reason for concern

Concerns over China's housing market which had been sizzling during the past three or four years may be well-founded, as latest official data showed home prices continued to cool in some cities.

In March, of a statistical pool of 70 major Chinese cities, 14 saw home prices either decline or stagnate on a monthly basis, the highest figure since early 2013. The average growth rate of the cities dipped to the lowest level for the past 15 months.

After large expansion, it is natural that China's real estate market brims with risks, and, given the sector's "great contribution" to the economy, reining in property risks would be crucial to maintaining the health of the country's financial system.

Wang pointed to the close ties between the property sector and shadow banking as a major reason for concerns, not least because risks in China's financial system already started to emerge as bad loans increased.

Jia Kang, director of the Research Institute for Fiscal Science at China's Ministry of Finance, warned against the "divergence" in China's housing market.

"In big cities like Beijing and Shanghai, the risks of the property market are not so big. But some other cities which are experiencing falling home prices have to be careful," Jia told Xinhua.

Doom-mongers

In spite of the increasing risks, economists said a full-blown property meltdown was unlikely, calling those foreseeing a crash in the whole economy "doom-mongers".

There has been no shortage of prophets who expect China's economy to crash. Former Morgan Stanley economist Andy Xie compared China's property and stock markets to a "horror movie", which "people like to watch, but don't want to be in", according to a Reuters report earlier this month.

Xie is among the more moderate of the bearish voices that have called a 'China crash' since the late 1990s. Gordon Chang, a Chinese-American lawyer and columnist has been predicting a crash for the past 15 years or so.

Risks for the Chinese economy have been exaggerated. Even the crisis like the subprime mortgage one in the United States had not knocked down the U.S. economy, Wang Xiaoguang said.

"At least for now, the housing market risks are ordinary ones in the process of economic growth. For those describing the risks in a way to make people panic is totally out of ulterior motives," he said.

Concerning sharp declines in home prices of some cities, led by Wenzhou and Erdos, Wang said, "At least for now, the risk exposure stemming from the two cities seems to be not so big."

As to whether the property risks would deal a lethal blow to the Chinese economy, Wang said, "I don't think they are systemic risks. They are actually regional and structural risks."

Yu Yongding, an economist at the Chinese Academy of Social Sciences, also dismissed China's real-estate price bubble as a catalyst for a crisis, as the down payment to buy a home in China exceeds 50 percent.

Given that property prices are unlikely to fall by such a large margin, and subprime mortgages account for 20 percent of the banks' total assets, the bubble's collapse would not bring down the country's banks, he said.

In case the bubble bursts, plummeting prices would attract new home buyers in major cities, causing the market to stabilize, predicted Yu, adding that the urbanization plan unveiled recently would also help prop up the market.

Bailout unnecessary

Anticipation has been building recently for some kind of action to bail out the property sector. However, economists said it was not necessary.

"Developers had been building too much. Why not let them take the responsibility. Only after going through bubble-bursting can they learn to be more cautious. And the process of unleashing the risks is also good for the health of China's economy," Wang said.

He likened the property sector to a sick man who has to go through pain before recovering. "In this process, you don't have to take any protective measures to artificially end the disease."

Declining home prices in some cities might also be helpful to rein in speculation in the property market.

"The divergence of home price moves will be a good thing as that is how a mature market functions, and it will force buyers to be more rational and market-minded," Jia Kang said.

It is still too early to say how this divergence would evolve in the future, but the price fluctuations conform to the rule of market, so there is no need for the government to overreact, Jia added.

To get China's real estate sector back on a healthy track, Jia suggested the authorities first increase supply of low-income housing and accelerate property tax legislation.

The making and enforcement of the property tax law, which is being piloted in Shanghai and Chongqing, is widely believed to be helpful to rein in housing market speculations.