A more decisive step would be for the Chinese state to step in as a buyer of last resort. This is what other countries have done during housing crises. Following the Great Depression, the U.S. government in 1938 set up the Federal National Mortgage Association, known as Fannie Mae, to reinvigorate the real estate market by buying up mortgages from banks. During the euro zone crisis, Spain set up an asset management company called Sareb to acquire distressed loans to property developers from Spanish lenders.

Such a bailout would be costly. Economists such as Huang Qifan, an adviser to the China Finance 40 Forum think tank, have put the sums required at anything from 50 trillion to 70 trillion yuan. Yet if the bank’s creation quickly revived confidence and averted a deeper housing slump, the state might only need to chip in a relatively small proportion of this.