Developer Evergrande Is Gone. China’s Property Crisis Isn’t.

Evergrande was once one of China’s largest developers and became the symbol of the country’s debt-fueled housing boom. Above: partially completed residential buildings by Evergrande in Tianjin in June 2024. (Jade Gao / AFP via Getty Images)

Key Points

• A Shenzhen court sentenced Evergrande founder Hui Ka Yan to life in prison for crimes including fund-raising fraud and financial disclosure violations.
• A Guangzhou court accepted a bankruptcy-liquidation petition against Hengda Real Estate, which is Evergrande’s main mainland property unit.
• The World Bank estimates that government programs delivered about 7.5 million presold homes by the end of 2025, representing 15% to 40% of the total.

Evergrande is gone from the stock market. Its founder may spend the rest of his life in prison. The apartments are another matter.

China has spent five years trying to clean up the wreckage of its property bust, including finishing homes that buyers paid for before developers ran out of money. Government programs had helped deliver about 7.5 million presold homes by the end of 2025, according to the World Bank. It estimates that represented only 15% to 40% of China’s total stock of presold but unfinished housing.

That matters beyond the families waiting for keys. Chinese developers traditionally sold apartments before construction was complete, using buyers’ money to help finance building. Evergrande’s 2021 default shattered confidence in that bargain.

“China’s property market is essentially a futures market, and the most important thing in a futures market is ensuring delivery,” said Lu Ting, Nomura’s chief China economist. “If the final on-time delivery rate is only 50%, will people still come to that market to trade and invest?”

The World Bank says concerns about unfinished projects, along with expectations of further price declines, are still making buyers cautious.

Beijing has thrown considerable money at the problem. A government “white list” has channeled more than 7 trillion yuan, or about $1.04 trillion, in loans toward viable projects under construction. Yet developer financing was still shrinking 21% from a year earlier in May. The World Bank says resolving the unfinished-home problem will probably be gradual.

Meanwhile, the broader market is still shrinking. Property investment fell 19.2% from a year earlier in the first seven months of 2026. Residential construction starts dropped 24.6%, completions fell 25.5%, and home sales by floor area declined 12.7%, according to China’s National Bureau of Statistics.

That is the backdrop to Thursday’s news that a Shenzhen court sentenced Hui Ka Yan, founder of Evergrande, to life in prison for crimes including fund-raising fraud, fraudulent securities issuance and financial disclosure violations. Evergrande was once one of China’s largest developers and became the symbol of the country’s debt-fueled housing boom.

The court also confiscated his personal assets and fined Evergrande and its main property unit a combined 15.82 billion yuan. On Friday, a Guangzhou court accepted a bankruptcy-liquidation petition against Hengda Real Estate, Evergrande’s main mainland property unit. The latest developments come almost exactly a year after Evergrande was forcibly delisted from the Hong Kong stock exchange.

Punishing the man who built Evergrande, however, is easier than repairing the economic model it helped break.

“Falling existing-home prices have damaged Chinese household balance sheets and affected consumption growth,” Zhang Ming, deputy director of the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, wrote last month.

The connection is increasingly visible. Inflation-adjusted home prices have fallen 23% from their July 2021 peak, while housing sales remain around half their mid-2021 high, according to the World Bank. Its measure of precautionary household saving reached 32.4% in the first quarter, compared with a prepandemic average of 29.6%. July retail sales rose just 0.6% from a year earlier.

For investors, that turns the property slump into a consumer story. Luxury groups, auto makers, restaurant chains and electronics companies are all counting on Chinese households eventually feeling comfortable enough to spend again. A sustained housing recovery could do more for that confidence than another round of shopping subsidies.

And it may not require another property boom. “There is no need to wait for a sharp rebound in housing prices,” said Shan Weijian, executive chairman of investment firm PAG. Once the property market genuinely stabilizes, he said, household consumption can gradually recover and grow.

Beijing is still trying to manufacture that stabilization. It relaxed housing restrictions this month, including cutting the residency requirement for some non-Beijing buyers. Shanghai followed Thursday with measures including a lower down-payment requirement on some second homes and subsidies of as much as 80,000 yuan for people trading an existing home for a new one.

There are tentative signs that parts of the market are stabilizing, but the recovery remains uneven. Existing-home prices in China’s four first-tier cities rose 0.2% in July, though the gain slowed from June. First-tier new-home prices were flat, while existing-home prices in second- and third-tier cities fell 0.3% and 0.4%, respectively, according to the statistics bureau.

Some economists think the adjustment may nevertheless be further along than those numbers suggest. Fan Gang, vice chairman of the China Society of Economic Reform and director of the National Economic Research Institute, argued at a property conference this month that China has already undergone a relatively rapid adjustment in property prices and could find a bottom faster than Japan did after its property bubble burst.

That is the hopeful case. Evergrande is the warning against declaring victory too soon. China avoided the sudden financial crash many feared in 2021. What it got instead may be harder for investors: a slow housing adjustment that keeps draining household confidence years after the company at its center is gone.

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