The punishment drew intense public reaction, yet China’s housing market still faces unfinished projects, falling prices, and years of painful adjustment.
A Chinese court last week sentenced China Evergrande founder Hui Ka Yan to life imprisonment. The former billionaire became one of the main symbols of China’s rapid property market boom and collapse.
At the same time, the verdict did not change the broader situation in the industry: the housing crisis, now in its sixth year, continues to weigh on the world’s second-largest economy. It is hurting millions of homeowners and creditors, weakening domestic demand, and pushing China to rely more heavily on exports.
Following the announcement of the verdict, a wave of angry comments appeared online in China. Users in particular asked why Hui Ka Yan had not been given the death penalty after being found guilty of a range of crimes, from misuse of funds to bribery.
China’s regulators began restricting excessively indebted developers six years ago, but the consequences of that move remain deeply felt. Unfinished residential complexes stand in regions across the country, the recovery in prices for new apartments in Beijing and Shanghai has stalled, and land sales continue to decline.
The pace of the decline in property sales and construction is accelerating. In smaller cities in the country’s central regions, prices for existing homes are nearly a quarter lower than in 2020. This further constrains household spending.
China’s economy grew by 4.3% year on year in April through June. This was the slowest growth rate in more than three years.
Once the main source of domestic demand, the property sector has now left the country increasingly dependent on exports. China’s trade surplus has more than doubled since 2019, intensifying disputes with the European Union and the United States. Trading partners, including countries in the Global South, fear a new wave of Chinese goods crowding out local producers.
A systemic problem with no quick solution
The problem is systemic, and there are few options for addressing it. There are more homes than households: more than a third of the population used a second home as an investment.
– Sam Radwan
Evergrande defaulted in 2021, and its liquidation process began in 2024. Its rival Country Garden defaulted in 2023 and has not purchased any land since then.
China Vanke is trying to extend the maturity dates of some of its bonds. The company has also replaced most of its executives with managers from state-owned enterprises.
Xi Jinping is seeking to redirect bank lending and state support from the property market toward strategic technology sectors, including robotics and semiconductor manufacturing. However, these industries are not yet large enough to offset the losses caused by the prolonged downturn in the housing market.
Growth and its benefits are being distributed much more narrowly across the economy. This is one of the key reasons why consumption is not recovering.
– Max Zenglein
After a series of defaults by private developers, the market is increasingly controlled by state-owned development companies. Market participants expect the state’s role in the real estate sector to grow further.
The key question is who stands behind the company: a central or local state-owned enterprise. In practice, banks have long since almost stopped lending to private developers.
– credit specialist at a major state-owned bank
Home prices could continue falling for years
Sam Radwan estimates that it would take about 18 months to sell off the existing housing inventory. In his view, prices would need to fall another 40% from their 2025 levels to reach market equilibrium, and the entire process could take roughly a decade.
Chinese citizens are very smart people. They understand well that the bottom is still far away, but they do not know where it is.
– Sam Radwan
At the same time, some analysts believe that the worst phase of the crisis may already have passed.
We do not expect a significant deterioration in the situation. The most likely scenario is continued gradual price adjustment, which will eventually clear the market and create conditions for some improvement.
– Christopher Beddor
The verdict against Hui Ka Yan became one of the main topics of online discussion. On Thursday, a tag related to the case drew more than 370 million views and 72,000 discussions.
Jason Wang, a 38-year-old homeowner, said that the value of his home in Shandong province had fallen by 25% since he bought it in 2019. Shandong is among the regions that have been particularly hard hit by the housing crisis.
This pain is unbearable. When people can barely afford to feed themselves, who can afford to buy a home?
– Jason Wang
The situation in China’s property market remains one of the country’s biggest economic risks: even after Evergrande’s collapse, no rapid recovery in demand, prices, or construction activity is expected.
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