Chenggong may still be largely empty but it is already attracting the attention of property speculators.

At one of the town's many estate agents, a Mr Xin is eyeing up new apartments. Originally from Wenzhou, the east coast city that is synonymous in China with free-wheeling capitalism, he already owns eight flats at a compound called Huilan Yuan, which had in theory been set aside for civil servants moving to the town, but he is interested in more. “I think it is a good idea to invest now before the property prices in Chenggong start to rocket,” says Mr Xin.

If there is one big idea to come out of the financial crisis, it is that monetary authorities should try to anticipate asset price bubbles, especially in property. China is now a test-case for the theory, given strong indications that the property market is getting close to bubble territory.

Hoarding empty flats in the hope of price rises is one indicator, but there are others. According to Standard Chartered, the average land price in China increased by 106 per cent last year. That includes an increase of more than 200 per cent in Shanghai, nearly 400 per cent in Guangzhou and 876 per cent in Wenzhou. “We believe we now have a bubble in many cities, particularly the big ones,” says Stephen Green, economist at the UK-based international bank.

Prices of land and property are central to the economy's prospects. Not only is real estate investment a significant driver of growth in gross domestic product but land sales are a vital source of revenue for local governments and they provide the financial backing for a large part of China's infrastructure investment. So while the Chinese authorities cannot allow the market to become too frothy, they equally cannot afford a sharp drop in prices, which could also cause a great deal of collateral damage in the economy.

As a result, Beijing is trying gently to slow the market. Tight controls over the financial system give it more levers than are available to regulators in other countries. The authorities now require a 40 per cent downpayment on mortgages for a second home and developers sitting on unused land face tougher penalties. Informally, banks have been urged to scale back lending to some developers.

Some local markets are still buzzing. In the southern China island of Hainan, a property rush in the first few weeks of the year sent prices up 18 per cent and by more than 50 per cent for some buildings. But there are reports that transactions in several of China's biggest cities slowed last month, which could be the precursor for a more orderly market. Beijing will certainly be hoping so.