China’s Property Crisis Deepens Despite Evergrande Founder’s Life Sentence

BEIJING — China’s prolonged property crisis continues to weigh heavily on the world’s second-largest economy, despite the recent life imprisonment of Evergrande founder Hui Ka Yan, underscoring the difficulty Beijing faces in resolving a sector that has been in turmoil for nearly six years.

Hui, once one of Asia’s wealthiest businessmen and the figure most closely associated with China’s property boom, was sentenced to life in prison after being convicted of offences including misuse of funds and bribery. His downfall has become a symbol of the dramatic collapse of a property sector that was once a major engine of Chinese economic growth.

However, the legal action against Evergrande’s founder has done little to resolve the broader problems confronting the property market. Millions of partially completed homes remain unfinished, while property prices in many smaller cities continue to decline. Land sales have also fallen sharply, and weakness in home sales and construction continues to weigh on economic activity.

The crisis began intensifying after Chinese regulators launched a crackdown on highly leveraged property developers in 2020. Evergrande subsequently defaulted on its debt in 2021 and was ordered into liquidation in 2024, leaving creditors and homeowners facing prolonged uncertainty. A Chinese court also recently accepted a bankruptcy liquidation case involving Hengda Real Estate Group, Evergrande’s mainland property subsidiary.

The downturn is increasingly affecting Chinese households and domestic consumption. In smaller inland cities, second-hand home prices have fallen by almost a quarter from 2020 levels, reducing household wealth and discouraging spending. China’s economy grew 4.3 percent year-on-year in the second quarter of 2026, its slowest pace in more than three years, according to Reuters.

The weakness in domestic demand has also increased China’s reliance on exports. Reuters reported that China’s trade surplus has more than doubled since 2019, contributing to growing trade tensions with the United States, European Union and other trading partners concerned about Chinese exports competing with domestic industries.

Several major developers have also experienced financial distress. Country Garden and China Vanke have defaulted or undergone restructuring, while state-owned companies have assumed a larger role in the property market. Analysts cited by Reuters said home prices may need to decline substantially further before the market can achieve a sustainable balance between housing supply and demand.

The property downturn has therefore become more than a corporate debt crisis, with consequences for household wealth, consumer confidence, local government finances and overall economic growth. Beijing’s efforts to shift economic momentum toward strategic industries, including advanced technology, have yet to fully compensate for the prolonged weakness in real estate.

With no immediate end to the property slump in sight, China faces the difficult task of stabilising the housing market while limiting its impact on consumers, financial institutions and broader economic growth.