The Rise and Fall of Evergrande: A Closer Look

1. What is Evergrande and why was it significant?

Evergrande was once China’s largest property developer and among the world’s most valuable real estate companies. At its peak in 2018, it managed over 1,300 unfinished projects across 280 Chinese cities. The company’s founder, Hui Ka Yan, became a symbol of China’s real estate boom and rapid urbanisation.

2. What caused Evergrande’s rise?

Evergrande’s growth was powered by China’s urban expansion, rising housing demand, and a highly leveraged business model. The company borrowed aggressively, sold apartments before completion, and reinvested profits into new ventures. It also expanded into sectors like healthcare, electric vehicles, sports, and entertainment.

3. What went wrong with Evergrande?

• Debt Overload: Evergrande accumulated more than $300 billion in liabilities through excessive borrowing.
• Policy Shift: In 2020, China introduced the “three red lines” policy to curb reckless borrowing by developers. This severely restricted Evergrande’s ability to raise new funds.
• Falling Demand: Slowing population growth, an ageing society, and high homeownership rates reduced housing demand, further straining the company’s finances.

4. How did Evergrande’s collapse unfold?

• 2021: Evergrande defaulted on offshore debt repayments.
• Trading in its shares was suspended for 18 months.
• 2022–2023: The company faced investigations, lawsuits, and liquidation proceedings.
• 2025: The Hong Kong Stock Exchange officially delisted Evergrande, marking the end of its operations as a property developer.

5. What were the ripple effects on China’s economy?

• Financial Stress: Creditors and investors suffered major losses as Evergrande’s assets were sold at steep discounts.
• Confidence Crisis: Household wealth tied to property values declined, weakening consumer spending and sentiment.
• Local Government Strain: Local authorities lost critical revenue from land sales, adding fiscal pressure.
• Economic Slowdown: The real estate sector, once contributing nearly a quarter of China’s GDP, contracted sharply, dragging down national growth.

6. Is it comparable to the 2008 Lehman Brothers collapse?

In some ways, yes. Both cases represent massive collapses of debt-driven institutions with global repercussions. However, while Lehman Brothers’ downfall triggered a worldwide financial crisis, Evergrande’s impact is mostly contained within China’s property sector and domestic financial system.

7. What is the Chinese government doing now?

Beijing is prioritising the completion of unfinished housing projects to protect homebuyers and restore confidence. It has also eased mortgage restrictions to revive demand, while shifting away from an economic model overly dependent on real estate-driven growth.

“Economic growth built on shaky foundations may rise quickly, but it cannot stand firm when the storm arrives.”