China's property crisis deepened even as Evergrande founder Hui Ka Yan received a life sentence, underscoring that the industry's problems now extend well beyond the fate of a single developer and its founder.

Property slump weighs on household wealth

Falling home prices, unfinished projects, weak sales and heavy developer debt continue to erode household wealth and restrain consumption. Because property has long been the dominant store of savings for Chinese households, the sector's downturn feeds directly into weaker household finances and spending. The strain also reaches buyers of pre-sold apartments who are still waiting on homes they have already paid for — in 2022, some staged scattered mortgage-payment boycotts on unfinished units. Economists commonly estimate that property and related industries account for roughly a quarter of China's economic activity, giving the downturn weight well beyond housing itself. The crisis has become an increasingly important challenge for China's economy.

No easy solution for the housing crisis

There is no easy solution to the housing downturn. The combination of unfinished homes, soft demand and indebted developers means the adjustment is likely to be prolonged, with the strain felt across households, homebuyers and creditors. One flagship policy response, a "white list" mechanism introduced in early 2024 to steer bank lending toward viable projects so pre-sold homes can be completed, tackles delivery backlogs rather than the underlying mismatch between housing supply and demand.

Government shifts focus to technology

Beijing, for its part, is shifting its support toward technology sectors, redirecting policy attention away from a property market that previous measures have sought to stabilize. Those measures have included mortgage-rate cuts, the easing of home-purchase restrictions in many cities and a 2024 initiative encouraging local governments to buy unsold housing stock for affordable use, while state support and credit have increasingly flowed toward advanced manufacturing, semiconductors and electric vehicles.

Recovery could take years

Analysts expect the housing market's prolonged correction to weigh on economic growth for years, with any recovery likely to be a gradual one. Among the markers they cite: whether home prices stabilize in the largest cities, how quickly pre-sold homes are delivered, how other distressed developers progress in restructuring their debts, and how the Hong Kong liquidation of Evergrande proceeds for creditors.

Hui's sentence reflects wider public frustration

The life sentence handed to Hui reflects wider public frustration over the property crisis and its toll on household wealth. The sentence was reported in March 2025 after a court in the southern city of Shenzhen convicted him of fraud and misappropriation of funds; the court said bonds issued by an Evergrande subsidiary had been sold on the basis of falsified financial statements. Evergrande, founded by Hui in 1996, grew into China's largest property developer by sales before defaulting on its debts in 2021 under liabilities exceeding $300 billion. In January 2024, a Hong Kong court ordered the liquidation of the company. Hui, also known as Xu Jiayin, had been placed under "mandatory measures" by mainland authorities in 2023 on suspicion of crimes. The distress has since spread across the sector, with Country Garden, which had itself ranked as China's largest developer by sales in recent years, defaulting on its dollar bonds in late 2023 and working through its own debt restructuring.

Source: Economic Times Markets