The Chinese property giant has struck off after a spectacular fall

The shares of the Chinese real estate giant Evergrande were withdrawn from the Hong Kong stock market on Monday after more than a decade and a half negotiation.

It marks a dark step in the past the largest Chinese real estate company, with a stock market assessment of more than $ 50 billion (37.1 billion pounds sterling). It was before its spectacular collapse under the weight of the huge debts that had fueled its meteoric climb.

Experts say that radiation was both inevitable and final.

“Once struck off, there is no return,” said Dan Wang, Chinese director of Political Risk Consultancy Eurasia Group.

Evergrande is now best known for a crisis that for years has dragged into the second world economy.

Barely a few years ago, Evergrande Group was a brilliant example of China’s economic miracle.

Its founder and president Hui Ka Yan went from humble beginnings in rural China to dominate the list of the richest people in Asia in 2017.

His fortune has since dropped by around 45 billion dollars in 2017 to less than a billion, his fall of grace as extraordinary as that of his business.

In March 2024, Mr. Hui was sentenced to a fine of $ 6.5 million and prohibited the Chinese capital market for life for his company overestimated its revenues of $ 78 billion.

Liquidators also explore if they can recover species for creditors from Mr. Hui’s personal property.

At the time of its collapse, Evergrande had some 1,300 projects under development in 280 cities across China.

The sprawling empire also included an electric car manufacturer and the most successful football team in China, The Guangzhou FC, which was expelled from the football league earlier this year after failing to pay enough debts enough.

Evergrande was built on $ 300 billion (222 billion pounds sterling) of the money borrowed, which earned him the little enviable title of the most indebted real estate developer in the world.

The rot has settled after Beijing brought new rules in 2020 to control the amount that major developers could borrow.

The new measures led Evergrande to offer its properties to major discounts to ensure that money was coming to keep the business afloat.

Fleting to respond to interest payments, the company quickly lacking on some of its debts abroad.

After years of legal disappearance, the HAUG Kong High Kong ordered that the company be in the process of being in January 2024.

Evergrande’s actions had been threatened with radiation since since they were suspended from negotiation after the court order.

At this stage, the crisis engulfing the company had suffered more than 99% of its market assessment.

The liquidation order intervened after the company was unable to offer an achievable plan to lose billions of dollars of liabilities abroad.

Earlier this month, liquidators revealed that Evergrande’s debts are currently $ 45 billion and that it has so far sold $ 255 million in assets. They also said they thought that a complete overhaul of the company “will prove to be out of reach”.

The “delimitation now is surely symbolic, but it is such a step,” explains Ms. Wang.

All that remains is which creditors are paid and how much they can get in the bankruptcy process, explains Professor Shitong Qiao from Duke University.

The next liquidation hearing is to take place in September.

China is faced with a number of major problems, including the prices of US President Donald Trump, high government debt, low consumption spending, unemployment and an aging population.

But the experts say that the collapse of Evergrande, as well as the serious problems encountered by other developers, have struck the country the hardest.

“The ignition of the property was the largest drag in the economy and the ultimate reason why consumption is removed,” said Ms. Wang.

This is particularly problematic because the industry has represented about a third of the Chinese economy and was a major source of income for local governments.

“I do not think that China has found a viable alternative to support its economy on a similar scale,” said Professor Qiao.

The real estate crisis has led to “massive dismissals” by strongly compensated developers, said Jackson Chan of the Bondsupermart financial market research platform.

And many real estate industry employees who have kept their jobs have seen major salary discounts, he adds.

The crisis also has a major impact on many households because they tend to save their property.

The prices of housing lowering at least 30%, many Chinese families have seen their economy fall, explains Alicia Garcia-Herrero, chief economist for Asia-Pacific at the French Bank Natixis.

This means that they are less likely to spend and invest, she adds.

In response, Beijing has announced a series of initiatives aimed at relaunching the housing market, stimulating consumption spending and stimulating the wider economy.

They go from measures to help new owners and support the stock market to buy electric cars and household items.

Despite the hundreds of billions of dollars that Beijing has paid into the economy, the former growth of China took place at “around 5%”.

While most Western countries are more than satisfied with this, it is slow for a country that has grown more than 10% per year as recently as 2010.

In short, probably not.

Even if Evergrande continues to make the headlines, several other Chinese real estate companies are still faced with major challenges.

Earlier this month, China South City Holdings received a liquidation order from the High Court of Hong Kong, which means that the largest developer is forced to liquidate from Evergrande.

Meanwhile, the Rival Country Garden real estate giant is still trying to conclude an agreement with its creditors to raft more than $ 14 billion in the current foreign debt.

After a series of reports, his next liquidation audience of the High Court in Hong Kong was expected to take place in January 2026.

“The entire real estate sector has been in trouble. More Chinese real estate companies will collapse,” said Professor Qiao.

Although the Chinese government has taken a number of measures to help consolidate the real estate market and support the economy as a whole, it has not dived to bail out the developers directly.

Mr. Chan says that these initiatives seem to have a positive impact on the real estate market: “We believe that the substance (has been reached) and he should be in slow recovery. However, we will probably not expect the recovery to be very strong.”

Wall Street’s investment giant Goldman Sachs warned in June that real estate prices in China will continue to drop until 2027.

Ms. Wang agrees and believes that the real estate market struck by China “reaches the substance” in about two years when the demand finally catches up with the supply.

But Mrs. Garcia-Herrero puts him in faster terms: “There is no real light at the end of the tunnel.”

Beijing sent a “clear message on its intention not to bail out the housing sector,” adds Ms. Wang.

The Chinese government has taken care to avoid the type of measures that could encourage behavior more risky by an already indebted industry.

And while At the time of the boom, the real estate market was a key engine of China’s economic growth, the priorities of the Communist Party in power are now found elsewhere.

President Xi Jinping is more focused on high -tech industries such as renewable energies, electric cars and robotics.

As Ms. Wang says, “China is in depth in a new era of development”.