From Boom to Doom: The Rise and Fall of Evergrande – China's Property Giant Crashes Out

Evergrande, once a titan in China’s real estate market, faced delisting from the Hong Kong stock exchange after more than 15 years of trading. This marks a tragic chapter for a firm that was once valued at over $50 billion. The inevitable collapse is attributed to its $300 billion debt burden and resulting failures amidst new government borrowing restrictions implemented in 2020.

The company’s fall reflects broader issues in the Chinese economy, heavily reliant on real estate, an industry contributing to roughly a third of the nation’s GDP. Evergrande’s chairman, Hui Ka Yan, saw his personal wealth plummet from $45 billion in 2017 to less than one billion. Adding to his woes, in 2024, he faced a $6.5 million fine and a lifelong ban for allegedly overstating company revenues by $78 billion. With 1,300 ongoing projects and even a football club in its portfolio, the company once epitomized China’s economic miracle.

As Evergrande battled to stay afloat, it began slashing prices to boost cash flow, resulting in defaults and legal entanglements. The Hong Kong High Court ordered the company into liquidation in January 2024, stripping away more than 99% of its stock value. Liquidators reported the firm’s debts now total $45 billion, with minimal asset recoveries.

Experts indicate that the real estate slump has severely suppressed consumer spending, leading to mass layoffs across the sector and impacting countless households who tied their savings to ever-falling property prices by at least 30%. The ramifications are deeply tied to the economy, which has slowed to growth rates around 5%, a stark drop from over 10% in 2010.

In response, the Chinese government is rolling out initiatives to revive the property market and stimulate broader economic growth, but prospects remain bleak. While some experts see signs of recovery, predictions suggest property prices might continue to fall until 2027. Moreover, Evergrande is not alone; other companies like Country Garden face similar precarious circumstances, pointing to a pattern in China’s property sector. Analysts suggest that without a massive government bailout, which is unlikely due to current leadership priorities, the sector will undergo further turmoil before any real recovery can take place.

As China shifts focus toward high-tech industries and sustainable growth, the struggles of Evergrande serve as a stark reminder of the risks associated with rapid economic expansion fueled by debt.