In 2021 the Chinese developer Evergrande made headlines when it became insolvent. The inability of Evergrande to pay back the deposits prepaid by its clients sparked worries about the health of the Chinese property industry, one of the biggest components of its economy. Since then, it has been relatively quiet in the world of Chinese real estate. But now the fears around large-scale defaults have resumed, sending stock and bond prices for Chinese developers down sharply this week. This time around the companies in question are much bigger, including the country’s largest home builder Country Garden and its biggest commercial developer Wanda.
If these companies are not able to pull out of their debt issues then it would certainly weigh on China’s entire economy. The Chinese government has already started to make some changes to help these large companies. They have officially removed the language that “property is for living not speculation” from the highlight of a meeting of the Politburo of the Chinese Communist Party, an influential group of 24 top officials who oversee the party and central government. This may mean that the government is planning on lifting some restrictions on foreign and domestic investment in real estate in order to help its property industry survive.