The global economic recovery has drawn support from a swift rebound in China. Now, investors and economists wonder whether a bursting Chinese property bubble could put China’s economy in a bind.

Over the past week, China’s cabinet has announced measures aimed at cracking down on property speculators, including tougher down-payment requirements for second and third homes. This comes after China reported an 11.7% rise in urban home prices last month from a year earlier, its fastest gain in five years.

“This is the critical policy point that finally cracks the Chinese property market,” declared Morgan Stanley China strategist Jerry Lou.

All this could be seen as bolstering the case for short-seller James Chanos. The name of Mr. Chanos’s $6 billion hedge fund, Kynikos Associates LP, means “cynic” in Greek—appropriate since the New York-based money manager earlier this year made himself the world’s best-known cynic when it comes to China’s growth story.

“What we’re talking about is a world-class, if not the, world-class property bubble,” Mr. Chanos said in an interview with Charlie Rose, comparing conditions in Chinese cities to Dubai and Miami. He predicts the bubble will begin to unravel later this year.

Mr. Chanos argues that China’s lending spree during the financial crisis has pumped too much money into real estate, and that housing prices have surpassed affordability.

Among the counter-arguments: China’s growing wealth feeds a long-term demand to upgrade the country’s housing stock, and regulators put a tight cap on loan-to-value ratios, limiting the downside of any bubble. Some note that China’s government, using measures such as those announced in the last week, has long avoided a crash in housing prices.

Those inclined to favor Mr. Chanos’s analysis—or who at least believe that some kind of correction is likely—could try to emulate his strategy. He is betting on a decline in the price of Hong Kong-listed Chinese property developers and other companies linked to China’s property market, such as those exporting cement and copper to China.