Evergrande’s rise and fall: A timeline of China’s property crisis

The long-running collapse of Chinese property giant Evergrande reached a dramatic juncture on Thursday, with a Shenzhen court sentencing founder Xu Jiayin to life in prison and imposing fines of more than $2 billion on the company and an affiliate.

The verdict closes another chapter in the downfall of the developer that became a symbol of China's property crisis. But the problems that triggered Evergrande's collapse continue to weigh on China's economy and remain a major challenge for policymakers.

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How Evergrande collapsed

Evergrande rose rapidly alongside China's decades-long urbanisation and growing household incomes. After listing in Hong Kong in 2009, the developer became one of the country's biggest property companies, with its market value at one point exceeding $50 billion under Xu's leadership.

Its fortunes began to change in 2020, when Beijing introduced rules aimed at curbing excessive borrowing by property developers. The measures made it increasingly difficult for Evergrande to meet its financial obligations.

As the broader property downturn deepened, Evergrande struggled to complete housing projects, its shares lost value and its cash position deteriorated.

The company defaulted in 2021, while a Hong Kong court ordered its liquidation in 2024. Its shares were subsequently delisted from the Hong Kong Stock Exchange in August last year.

Xu pleaded guilty in April to charges including fraud and bribery. During a public hearing, he faced accusations including illegally absorbing public deposits, fundraising fraud, illegally issuing loans and illegally using funds, according to a court statement.

Why Evergrande matters to China's economy

Evergrande's collapse has unfolded alongside a wider property downturn that has hit a sector long regarded as a major engine of China's economic growth.

The troubles have spread beyond Evergrande to developers including Country Garden, Vanke and Kaisa, weighing heavily on consumer confidence and making potential homebuyers more hesitant to purchase property.

That weakness comes at a difficult time for Beijing, which wants to shift China's growth model towards domestic consumption and away from its longstanding dependence on property and infrastructure investment.

Alicia Garcia-Herrero, Asia-Pacific chief economist at Natixis, said the Evergrande crisis made the property problem more structural and exposed weaknesses in the system.

She pointed to several factors behind weak housing demand, including stagnant household disposable incomes and China's shrinking population.

The pressure remains visible in recent data. Official figures released this week showed new-home prices fell at a faster pace in July than in June.

What Beijing is doing

Chinese policymakers are trying to contain the damage from the property crisis while preventing it from creating wider instability in the economy.

Also Read: China Evergrande Group, world's most indebted property developer, to delist from Hong Kong Stock Exchange after largest debt collapse

Thursday's court action sends a clear message to developers, according to Dan Wang, a director on Eurasia Group's China team. She said the ruling indicates that Beijing has not changed course and does not intend to bail out the property sector.

The verdict also signals to companies that they need to be more cautious about taking on debt, Wang said.

At the same time, Beijing is trying to revive an economy that has experienced slower growth in recent years. The government has set a GDP growth target of 4.5-5% for this year, its lowest official target in decades.

Growth fell below that range in the second quarter, while July data showed retail sales declining from a year earlier.

The property sector has remained particularly weak. Investment in real estate development fell by nearly one-fifth year-on-year in the first seven months of the year, underscoring the scale of the challenge facing China's policymakers.

(With inputs from AFP)