In 2017, Hui Ka Yan, the founder of China Evergrande Group, was the richest man in Asia with a fortune estimated at 45 billion dollars, and his company was a symbol of China’s stunning economic growth. Just a few years later, Evergrande, indebted to the tune of over 300 billion dollars, was placed into liquidation, and its shares were delisted from the stock exchange. The collapse of the world’s largest developer was not, however, an ordinary bankruptcy. It was a turning point for the entire Chinese economy, exposing the fragility of a growth model based on astronomical debt and speculation in the real estate market that had driven China’s development for decades. This is the story of how an empire built on debt collapsed, dragging down an entire sector and forcing Beijing to choose between rescuing a giant and the long-term stability of the financial system.
Just a few years ago, China Evergrande Group was the unattainable model of China’s economic miracle. The company, founded in 1996 in Shenzhen, grew over two decades into China’s largest property developer, with a stock market valuation exceeding 50 billion dollars. Its founder, Hui Ka Yan, became the embodiment of success of the new Chinese entrepreneurial class. In 2017, Forbes magazine estimated his fortune at 45 billion dollars, making him the richest man in Asia. Evergrande’s empire, however, was not limited to real estate. The group also owned electric vehicle manufacturer Evergrande NEV, which planned to produce luxury SUVs, and the most decorated Chinese football club, Guangzhou FC.
Evergrande’s business model, like that of other Chinese development giants, was based on a simple but extremely risky assumption. The company massively took out billion-dollar loans from state-owned banks and foreign investors such as BlackRock, HSBC and UBS to finance land purchases and the construction of housing estates. New investments were then sold, often before completion, and the proceeds were used to repay old liabilities and take out new ones. In this way, Evergrande created a giant financial pyramid, the stability of which depended on an uninterrupted flow of cash and the continuous rise in property prices. At the time of its collapse, the company was carrying out around 1,300 projects in 280 cities across China, and its total liabilities reached an astronomical 328 billion dollars.
The end of the era of unlimited debt
The turning point in Evergrande’s history came in 2020, when the Chinese authorities, concerned about the growing debt of the real estate sector, which then accounted for about a quarter of China’s GDP, introduced new, restrictive regulations. The new rules, known as the „three red lines,” radically limited developers’ ability to take out new loans, making access to financing dependent on debt levels, debt-to-asset ratios and liquidity indicators. This was a direct blow to the business model of companies like Evergrande, which for years had functioned solely thanks to unlimited access to cheap capital.
The new regulations cut Evergrande off from the sources of financing that had kept it alive. The company, which for years had ignored the fundamentals of sound financial management, suddenly faced the impossibility of even paying the interest on its giant debt. In 2021, Evergrande declared insolvency, meaning that it was the first of China’s development giants to be unable to meet its obligations to creditors. The company’s share price collapsed, and panic spread across financial markets. Investors around the world began to ask whether Evergrande’s collapse would become the beginning of a crisis on the scale of the Lehman Brothers bankruptcy in 2008.
Evergrande’s collapse was not an isolated case but part of a broader crisis that engulfed the entire Chinese real estate sector. Subsequent companies, such as Country Garden, which tried to write off over 14 billion dollars in unpaid debt, and China South City Holdings, which received a liquidation order from the Hong Kong Supreme Court, began to fall like dominoes. Beijing, although aware of the dramatic consequences of the collapse of a sector that had driven economic growth for decades, decided not to rescue the most indebted companies. As analysts note, this decision, although in the short term it may be catastrophic for the economy, is in line with the authorities’ long-term strategy, which aims to shift the Chinese economy from a model based on investment and debt to growth driven by domestic consumption.
The truth about the enormity of the debt
After years of unsuccessful restructuring attempts and presenting creditors with only „general ideas” rather than concrete repayment plans, a Hong Kong court in January 2024 decided to place China Evergrande into liquidation. Judge Linda Chan, justifying the ruling, stated that the company was „manifestly insolvent and unable to pay its debts.” Judge Chan also emphasised the lack of progress in presenting a realistic restructuring plan, which made liquidation the only proper solution to protect the interests of creditors.
– This is a situation where the court says enough – Judge Chan said. The creditors, represented by lawyer Fergus Saurin, did not hide their disappointment, stating that Evergrande „has only itself to blame for being liquidated.”
The scale of Evergrande’s debt turned out to be even greater than initially thought. Court documents revealed that the company owes foreign creditors approximately 25.4 billion dollars. The group’s total liabilities were estimated at over 300 billion dollars, and its assets worth about 240 billion dollars were insufficient even to cover half of these debts. In August 2025, after more than 15 years of presence on the Hong Kong stock exchange, Evergrande’s shares were finally delisted. The exchange committee decided to delist the shares after the company failed to resume trading in its shares, which had been suspended since the beginning of 2024.
The liquidators, appointed by the court from the firm Alvarez & Marsal, faced the task of selling Evergrande’s assets to repay creditors. One of the first steps was to sue the auditing firm PwC and its Chinese branch for the role they played in auditing the indebted developer. PwC came under scrutiny after China launched one of the largest financial crime investigations in history, which revealed that Evergrande had inflated its revenues by 78 billion dollars. In March 2024, Hui Ka Yan was fined 6.5 million dollars and banned for life from China’s capital market.
Admission of guilt as a symbolic end of an era
The collapse of Evergrande found its personal epilogue in April 2026, when the company’s founder, Hui Ka Yan, stood trial in Shenzhen. During the two-day trial, which was observed by deputies to the National People’s Congress and members of the Chinese People’s Political Consultative Conference, Hui Ka Yan pleaded guilty to a series of charges, including fraud, corruption, illegally obtaining public deposits and unauthorised disclosure of important information. The court informed that Hui „pleaded guilty and expressed remorse.” The verdict was to be announced at a later date.
Hui Ka Yan’s trial was the symbolic closing of a chapter in the history of Chinese capitalism. The man who just a few years earlier had been the embodiment of success and was at the top of Asia’s rich list stood before the justice system as a symbol of excessive greed and risk that led to one of the largest bankruptcies in history.
His fortune, once estimated at 45 billion dollars, had shrunk to less than a billion. Hui Ka Yan’s case also highlighted the deep systemic problems that made possible the emergence of such a debt giant. The company had been audited for years by PwC, which failed to detect the scale of the fraud. The collapse of Evergrande revealed that the growth model based on astronomical debt and speculation in the real estate market was no longer sustainable.
Domino effect for the Chinese economy
The liquidation of Evergrande, although it took place in 2024, continues to send shockwaves through the entire Chinese economy in 2026. In July 2026, Evergrande again made headlines when its liquidators blocked the sale of 51 percent of shares in the subsidiary Evergrande Property Services, which had significant implications for rebuilding the company’s value and its ability to continue operating. The collapse of the largest developer led to a cascading domino effect, in which hundreds of smaller construction companies and suppliers declared bankruptcy, and thousands of unfinished housing estates came to a standstill.
For ordinary Chinese people who had invested their entire lives in buying apartments from Evergrande, often unfinished, the company’s bankruptcy meant the loss of a lifetime’s savings. In the real estate market, where about 70 percent of household assets are tied to property, an atmosphere of uncertainty prevails. New home prices in 70 Chinese cities continued to fall in July 2026, and consumers, fearing further collapses, held back from making purchases.
China faces a serious challenge. On one hand, the real estate sector, which for decades had been the engine of growth, lies in ruins, and attempts to rescue it through further stimulus are not producing the expected results. On the other hand, the Chinese authorities, aware of the scale of the problem, are taking steps to stabilise the situation. The government is trying to ensure the completion of unfinished projects and is introducing new regulations to prevent similar disasters in the future. In 2026, however, the Chinese financial system is entering a new year with clear tensions and internal contradictions. The collapse of Evergrande remains a warning of what can happen when developers, banks and investors forget the basic principles of financial prudence, and excessive optimism and the desire for quick profits lead to a catastrophe of unprecedented scale.
Photo: Evergrande
