China's property crisis has dragged into its sixth year with no sign of easing, even after a Chinese court last week sentenced Xu Jiayin, former chairman of Evergrande Group, to life in prison. The crisis remains a major drag on the Chinese economy, affecting millions of households and forcing China to rely more on exports, which has created trade tensions with the European Union and the United States. Over the past six years, millions of unfinished housing projects have been abandoned, new home prices in major cities such as Beijing and Shanghai have stopped recovering, land sales have fallen, and property sales and construction have continued to slump. In smaller cities and inland areas, second-hand home prices have dropped nearly 25 percent from 2020, slowing consumption. Evergrande defaulted on its debt in 2021 and entered liquidation proceedings in 2024, while Country Garden defaulted in 2023 and has not purchased new land since then. China Vanke is seeking to extend repayment on some of its bonds and has replaced most of its senior management with executives from state-owned enterprises. President Xi Jinping has tried to shift credit and government support away from the property sector toward technology industries such as robotics and semiconductors, but analysts say these industries are still too small to offset the drag from the property market. After most private property developers defaulted, state-owned developers became the main players in the market, and the market expects China's property sector to come under greater state oversight. A credit officer at a major state bank said the main thing the bank considers is whether the entity behind a project is a central or local state-owned enterprise, adding that in practice the bank has long almost stopped lending to private property developers.
Former chairman sentenced to life in prison, highlighting regulatory crackdown on Evergrande.
