Hedge fund manager James Chanos is overly pessimistic about China’s property market because he underestimates government efforts to avoid a bubble, according to Fan Gang, a former People’s Bank of China adviser.

Chanos said this month that China is on a “treadmill to hell” because it’s hooked on property development for driving growth. “That statement is under the assumption that Chinese are stupid, Chinese will not do anything to deal with that,” Fan said in a Bloomberg Television interview recorded in Hong Kong yesterday.

While some cities show signs of excessive price gains, government efforts are stabilizing the market before the emergence of any “big” bubble such as those seen previously in the U.S. and Japan, Fan said. Officials rolled out the “most draconian” measures yet to cool prices after record gains in March, according to Deutsche Bank AG.