Evergrande: China’s $300B Property Crunch (2021) - QuickFinanceStories

It was the world's most indebted company. $300 billion in liabilities. Building homes for a billion people. Until it couldn't build anything at all.

This is the story of Evergrande. In China, property isn't just property. It's 70% of household wealth.

It's how local governments fund themselves - by selling land. It's the engine of the entire economy. Real estate and related industries make up nearly 30% of China's GDP.

And Evergrande was the king. For years, the model worked perfectly. Sell apartments before they're built.

Collect deposits from buyers who wouldn't see their homes for years. Use that cash to start new projects. Borrow against everything.

Grow. Grow. Grow.

At its peak, Evergrande had 1,300 projects in 280 cities.

At its peak, Evergrande had 1,300 projects in 280 cities. Chairman Xu Jiayin became one of Asia's richest men. The empire expanded beyond real estate - into soccer teams, electric car companies, bottled water, theme parks, even a pig farming venture.

The ambition seemed limitless. So did the debt. Then Beijing changed the rules.

In August 2020, the government introduced the "three red lines" policy. Three financial thresholds that developers had to meet to keep borrowing. Evergrande couldn't meet a single one.

Credit dried up overnight. New projects stalled. Cash flow collapsed.

Homebuyers who had paid deposits - sometimes their entire life savings - saw nothing but unfinished concrete. Across China, construction sites went silent. In September 2021, Evergrande missed its first bond payment.

Then another. And another. Suppliers went unpaid.

Workers protested. Homebuyers demanded their apartments. The world watched, terrified of contagion.

Would this be China's Lehman moment? China's government stepped in. But not to save Evergrande.

They moved to finish the apartments. Keep people calm. Manage the collapse rather than prevent it.

Xu Jiayin was eventually detained. The company was ordered to liquidate in early 2024. The lesson echoes through every bubble: When growth depends on endless borrowing, the end is never pretty. And when an entire economy depends on one asset class, everyone is exposed.