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The Chinese Property Sector Crisis: A Deep Dive

The Chinese property sector crisis, which has unfolded since 2020, has captured global attention due to its far-reaching implications. Let’s delve into the origins, key events, and potential consequences of this financial turmoil.


In 2005, the Chinese property bubble began to inflate rapidly. Average land values tripled by 2009, and this trend continued until 2011. Local governments, reliant on infrastructure development for revenue, fueled the bubble by selling land use rights. The 2007–2008 global financial crisis further exacerbated the situation, as local governments invested heavily in infrastructure, accumulating substantial debts


Evergrande Group, one of China’s largest property developers, played a central role in this crisis. Between its 2009 initial public offering and 2017, Evergrande’s stock price multiplied eightfold, making it the world’s most indebted property group. However, the company faced financial stress due to overbuilding and new Chinese regulations on debt limits for property developers.

The Evergrande Default

The crisis reached a tipping point in 2021 when Evergrande defaulted on its debt. The company unsuccessfully attempted to sell assets to generate funds, missed several debt payments, and was downgraded by international ratings agencies. In December 2021, Evergrande defaulted on an offshore bond, leading to a global market impact. Foreign investment in China slowed down, affecting economies worldwide.

The crisis extended beyond Evergrande to other major property developers, including Country Garden, Kaisa Group, Fantasia Holdings, Sunac, Sinic Holdings, and Modern Land. Thousands of retail investors, banks, suppliers, and foreign investors were owed a staggering 2 trillion RMB (approximately 310 billion USD) by Evergrande alone.

Unfinished Projects and Vacant Apartments

In September 2023, He Keng, a former deputy head of the National Bureau of Statistics, revealed a startling statistic: unfinished and finished-but-vacant apartment projects in China could potentially house the entire Chinese population of 1.4 billion. This surplus highlights the severity of the crisis and its impact on the real estate market.

Hong Kong Court Orders Liquidation

On January 29, 2024, a Hong Kong court ordered Evergrande’s liquidation, marking a significant development in the crisis. The company’s downfall has implications not only for China’s economy but also for global markets and investors.

Consequences and Uncertainties

The Chinese property sector crisis poses risks beyond the real estate market. Many property developers struggle to repay debts, leading to liquidity crises. If the crisis persists, it could affect suppliers, small- and medium-sized construction companies, and household consumption. Policymakers face the challenge of balancing financial stability with economic growth.

In conclusion, the Chinese property sector crisis remains a complex and evolving situation. Its resolution will require careful management, transparency, and international cooperation to mitigate broader economic repercussions.



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