CHINA Property Market Starts to Collapse as More Developers Follow Evergrande into Liquidation
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The Chinese property market is facing a huge crisis, with several major developers on the brink of liquidation. Country Garden, the largest property developer in China between 2017 and 2022, has received a winding up order and is facing liquidation proceedings. This follows the liquidation of Evergrande, which had over $328 billion in debt. The two companies are just a few of the many struggling developers in the country.
The troubles in the Chinese property market began when developers built up huge amounts of debt to fuel their rapid growth, leaving them vulnerable to financial shocks. When the Chinese government cracked down on debt and sentiment shifted against the property sector, developers found themselves unable to access funding to complete their projects. With investors losing confidence, the market has continued to decline.
The Chinese authorities must now decide how to respond to the crisis, including whether to allow liquidations to proceed or try to restructure the debt. If the sector continues to decline, it could drag down the entire Chinese economy, which accounts for 25% of the country’s GDP.
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