The Chinese property market, in particular the housing market, has experienced a downturn since 2008 even though the banking sector remained well capitalised. This paper analyses the government intervention to prevent an overheating property market from endangering the banking sector and the impact of tight credit on the property market. It first examines the damage of the property downturn to the countryís financial sector in mid 1990s. The paper then explains why the widespread adoption by local governments of the property-led urban economic growth model is very likely to cause a massive property market and banking crisis. It argues that the Chinese government intervention is to avoid a repeat of the financial crisis, which is deemed to be more damaging than a property crisis. The measures to cool down property market activities include tightening bank credit to both developers and mortgage borrowers, raising interest rates, imposing transaction and income taxes, and restricting foreign investment in housing. The fight by local governments against those measures has delayed the adjustment process by the property industry to avoid being trapped in the market downturn. The paper concludes that intervention by the Chinese government does enable China to avoid a financial crisis but the damage to the property industry is not the necessary price for saving the banks if Chinese cities could reduce their reliance on property-led economic growth.