Those who watch China have shifted their concerns about the growth in the country and its exchange traded funds (ETFs). What were fears that the stimulus wouldn’t be enough to save the country morphed into fears that lax policies have fed a housing bubble. But is any of this correct?

China’s stock market is up by more than 60% since last November with a p/e ratio of 24.  This may seem high, but it’s a far cry from the eye popping price/earnings ratio of 70 seen during China’s previous bubble in 2006-2007 and much lower than the nation’s long-term average of 37, reports the Economist.

The volume of property sales has surged by 85% over the past year and the prices of new apartments in Shanghai have risen by nearly 30%.  Additionally, average Chinese home prices are nine times average annual household income.

Is there a real estate bubble? Some believe that prices have been pumped up by imprudent bank lending, which is a red flag. When one looks at the sector in more detail, however, average nationwide house prices have risen by 2% over the past year and in relation to income, average house prices in China have fallen slightly over the past decade.  Prices are rising nowhere near as fast as they did during the previous boom in 2004-07. (Learn how bubbles form and how to avoid them).

In the short-term, it appears that China isn’t in bubble territory.  To keep it out, analysts say, the government needs to deal with excess liquidity and allow the yuan to appreciate.

For more stories on China, visit our China category.

• iShares FTSE/Xinhua 25 Index (NYSEArca: FXI): up 48.3% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 55.4% year-to-date

Kevin Grewal contributed to this article.

Tags: Asia, China, Emerging Markets, FXI, Global ETFs, GXC, Real Estate