China's cooling property market could shave more than 2 percentage points off 2012 growth,

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forcing Beijing to decide just how badly it wants to keep the economy expanding at more than 8 percent a year.

Even if the world's second-biggest economy avoids a housing crash, slower property investment is almost certain to constrain growth. That assumption was built into economists' predictions that the economy will slow in 2012, but data released this week suggests housing may take an even bigger chunk out of growth.

China's investment in real estate development rose 28 percent to 6.17 trillion yuan ($977.67 billion) in 2011 -- a full $200 billion more than the United States put into residential real estate at the peak of its housing bubble in 2005.

Unlike the United States, China does not have an oversupply of housing. In fact, the government has pledged to build 7 million units of public housing in 2012 after an estimated 10 million in 2011.

But in order for property investment to add to GDP growth, it has to keep getting even larger each year, and with real estate prices falling and developers scrounging for credit, China will be hard pressed to outdo 2011's strong showing.

"If they build the same amount (in 2012) that they did last year, which is still a phenomenal rate of construction, then it would take GDP down to 6.6 percent," said Patrick Chovanec, an economist who teaches at Tsinghua University's School of Economics and Management in Beijing.

That would be a dramatic slowdown from 2011's 9.2 percent growth, and it doesn't even include potential indirect impacts that typically come with a housing slowdown, such as falling demand for building materials or a rise in banks' bad debts.

China's latest economic plan targets GDP growth of 7 percent, but economists widely consider 8 percent as the minimum needed to generate sufficient job growth and support social stability -- top priorities for the Communist Party.

The Chinese phrase "bao ba", or protect 8, is a commonly used line, illustrating Beijing's unwritten imperative to keep annual growth above that threshold.

"It's something that's almost ingrained within the (Communist) party," said Alistair Thornton, an economist with IHS Global Insight in Beijing.

Thornton thinks 2012 growth will dip to the 7.5 percent to 8 percent range, largely because of the housing slowdown. But he said it could easily drift down to 7 percent if China chooses not to prop up the property market.

UBS economist Tao Wang predicted property investment growth would halve in 2012, less dire than Chovanec's prediction for a flat reading. That leaves GDP right around the 8 percent mark.

"We continue to hold the view that property investment will slow sharply but will not collapse in 2012," she said.

Data released on Wednesday showed Chinese house prices have fallen for three consecutive months as of December, and property developers are bracing for a brutal 2012. A Reuters poll released on Jan. 10 found economists expected property prices to fall 10 to 20 percent this year.