China’s property crisis grinds on after Evergrande sentencing

In Beijing, China's once notorious property magnate Hui Ka Yan received a life sentence for crimes including misappropriation of funds and bribery, but the fallout from his company Evergrande's collapse continues to impact the world's second-largest economy. Over six years since regulators cracked down on the housing sector, millions of partially built properties sit idle, new-home prices in major cities have stagnated, land sales have plummeted, and property sales and construction are declining at an accelerating rate.

Smaller inland cities have seen second-hand home prices fall nearly 25% from 2020 levels, dampening consumer spending. China's GDP grew just 4.3% in the quarter ending June 2025, the weakest performance in over three years, with the economy increasingly relying on exports for growth. This surge in exports has strained trade relations with the EU and the US and sparked concerns about a "China Shock 2.0" as Chinese goods replace local industries.

Evergrande's default in 2021 and liquidation in 2024 triggered a chain reaction, with competitors Country Garden and China Vanke also facing financial difficulties. President Xi Jinping has shifted bank credit and state support away from real estate towards strategic tech sectors, but these industries are not yet large enough to compensate for the ongoing housing slump.

Analysts say growth benefits are unevenly distributed, contributing to sluggish consumption. As most private developers have gone bankrupt, state-owned firms now lead the market. The property sector is expected to face tighter state oversight, with banks largely refusing to lend to private developers. It may take up to 18 months to clear home inventory, and home prices need to drop another 40% to stabilize.

While experts don't anticipate a sharp worsening, they expect a prolonged correction, potentially lasting a decade.