Chinese property giant Evergrande’s shares were taken off the Hong Kong stock market on Monday after more than a decade and a half of trading. It marks a grim milestone for what was once China’s biggest real estate firm, with a stock market valuation of more than $50bn. Evergrande was built on $300bn of borrowed money, earning it the title of the world’s most indebted property developer. The company’s collapse has hit the country’s economy hard, with the property sector accounting for about a third of the Chinese economy and being a major source of income for local governments.
The crisis has led to massive layoffs by heavily-indebted developers, and many real estate industry employees have seen big pay cuts. The crisis is also having a major impact on many households as they tend to put their savings into property. With housing prices dropping by at least 30%, many Chinese families have seen their savings fall in value. Beijing has announced a raft of initiatives aimed at reviving the housing market, stimulating consumer spending, and boosting the wider economy.
However, experts say the property crisis is far from over, with several other Chinese property firms still facing major challenges. The Chinese government has taken measures to help shore up the property market, but it has not directly bailed out developers. While some experts believe the property market has hit the bottom and will slowly recover, others warn that property prices in China will continue to fall until 2027. The Chinese government has prioritized high-tech industries like renewable energy, electric cars, and robotics over the property sector.
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