THE last time Beijing turned the screws on property investment, the world woke up to find China's heavy industry sector had been flattened and the resources boom had turned to bust. Rio Tinto jumped into the arms of Chinalco, banks pulled the rug from under Oz Minerals and the Reserve Bank slashed interest rates by 4 percentage points in a little over five months.

No surprise, then, that global investors are fretting about the fresh round of tightening that began a month ago. Chinese banks have lifted minimum mortgage deposits from 20 to 30 per cent for first home buyers and from 40 to 50 per cent for second home buyers. Beijing and some other major cities went an extra step by suspending all third mortgages, banning mortgage lending to non-city residents and floating threats of a new property tax. Chinese media were required to report ''the success of government policy tightening'' and otherwise guide ''healthy market expectations''.

The result was that the average new apartment price in Shenzhen dropped 26 per cent in the first week of May compared with the last week of April, according to data from E-House, which is derived from government land transaction centres. Shanghai prices fell 28 per cent. Beijing prices fell by less, but only because they had started their price plunge earlier.

So is this the Jim Chanos moment where China's ''treadmill to hell'' reaches its destination? Is China ''Dubai times 1000'', as the hedge fund manager claimed?

Hardly. Beijing, Shanghai and Shenzhen - where real estate excitement has been most frenetic - only account for 8 per cent of Chinese residential construction, according to UBS. Household debt is rising fast but remains minuscule when compared with Australia. Chinese incomes continue to outpace the rise in house prices.