Recent headlines have focused on the factories that are locking up their gates in places like the Pearl River Delta and Zhejiang Province, leaving thousands of migrant workers out of work.

But it is not even the big manufacturing companies going bust that ought to be of concern, says one senior analyst. Rather, it’s the real estate developers.

“A toy factory can lay off 4,000 or 5,000 workers at most. But even a small developer can lay off 50,000 workers,” Jing Ulrich, the chairman of China equities for JP Morgan, said at a recent seminar that I attended at the Cheung Kong Graduate School of Business in Beijing.

Anyone who has seen a major construction project under way in China’s big cities knows how construction companies throw workers at a project. At one point before construction companies finished erecting Terminal 3 at Beijing’s international airport, there were 50,000 workers just at that one site.

Even small developers have multiple projects ongoing at any given time. So if a developer goes belly up suddenly, a lot of workers get the boot.

According to an article in today’s China Daily, the property sector employs 77 million people.

The construction industry also has a huge knock-on effect elsewhere in the economy. Ulrich noted that 50 percent of China’s steel production goes to construction.

Ulrich says she things property sales have hit bottom and are picking up. But China’s government is still clearly worried. Today, it announced tax breaks for the real estate sector, including a move to let people sell their homes tax-free after only two years, a reduction from five years.