How China's property boom created and ate up world's most indebted firm

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Once China's top developer, Evergrande's fall highlights Beijing's fragmented approach to a deepening real estate slump, with little relief for offshore creditors or private firms
An aerial view of an unfinished residential compound developed by China Evergrande Group in the outskirts of Shijiazhuang, Hebei province, China, on February 1, 2024. Reuters File
China Evergrande's shares will be removed from the Hong Kong bourse some 19 months after they were suspended. This moment ought to have marked the end of a difficult chapter for the property market of the world's second-largest economy. Instead, it draws attention to a long, messy slump with no holistic solution in sight.
President Xi Jinping's sweeping deleveraging campaign was barely one year old when Evergrande defaulted on a US dollar bond in December 2021. When talks to restructure its $300 billion of total liabilities began, creditors took a tough stance, factoring in a quick property market rebound to lift what was still China's largest developer by sales.
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Indeed, bust-and-boom cycles in the People's Republic used to come thick and fast. The real estate market was in the doldrums when Evergrande went public in Hong Kong in 2009. Its market capitalisation hit an all-time high of $53 billion in 2017 thanks to Xi's campaign to fight deflation by tackling a nationwide housing glut.
Though the economy is once more battling deflation, Xi has so far refused to revert to this playbook. There is no big property stimulus. Real estate investment fell another 11% in the first six months of 2025, compared to the same period a year earlier. In a readout of the ruling Politburo's July meeting, which usually sets economic priorities for the second half of the year, the property market was not mentioned.
Instead, Xi's administration is allowing local governments to formulate their own housing policies. So while prices and sales in some cities like Beijing and Shanghai rebound, a nationwide revival is less likely in the near term.
This fragmented landscape will be challenging for property companies that pushed nationwide in previous boom cycles. In a report published this week, analysts at HSBC expect a 'highly divergent' recovery which benefits state-backed players with strong pricing power in regional markets.
None of Evergrande's other major rivals have decisively drawn a line under their problems: Country Garden is facing a winding-up petition, and Sunac creditors in April accepted a second debt restructuring in as many years. Nor is there a clear path to resolving the Evergrande mess.
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After assuming control over the company 18 months ago, liquidators Alvarez & Marsal's Edward Middleton and Tiffany Wong provided their first progress report on Tuesday and revealed the recovery of only $255 million in funds, against $45 billion of filed claims.
It's no surprise that Beijing is prioritising the completion of projects on the mainland over offshore creditors, but it's an awkward reminder of the depth of China's ongoing property crisis.