China's Property Slump Deepens After Evergrande Founder's Life Sentence
China's property crisis continues to drag on the economy, with prices still far from equilibrium and exports increasingly relied upon for growth.
The life sentence handed down to China Evergrande founder Hui Ka Yan last week has done little to ease the property sector's prolonged downturn, now in its sixth year. The collapse continues to weigh on the world's second-largest economy, affecting millions of households and pushing China toward export-led growth that is stoking trade friction.
Analysts see no quick resolution. While some believe the worst may be over, others warn that home prices could need to fall another 40% from 2025 levels to reach equilibrium—a process that might take a decade. The inventory of unsold homes could take 18 months to clear, according to one estimate.
New-home price recoveries in major cities like Beijing and Shanghai have stalled, land sales are plunging, and declines in sales and construction are accelerating. In smaller inland cities, second-hand prices are down nearly a quarter from 2020 levels, dampening consumption. China's GDP grew just 4.3% year-on-year in the second quarter, the slowest pace in over three years.
With domestic demand weak, exports have become a critical growth driver. China's trade surplus has more than doubled since 2019, escalating tensions with the EU and the US and raising fears of a "China Shock 2.0" as exports displace local industries in trading partners, including in the Global South.
The crisis has reshaped the property landscape. Private developers like Evergrande and Country Garden have defaulted, while state-owned enterprises now dominate. Banks have largely stopped lending to private developers, and the sector is expected to face tighter state oversight.
President Xi Jinping has tried to redirect credit and state support toward strategic tech industries such as robotics and semiconductors, but these sectors remain too small to offset the housing slump's drag. The benefits of growth are now more narrowly distributed, which analysts say is a key reason consumption remains weak.
Public anger over the crisis has been visible online. A hashtag related to Hui's sentencing drew over 370 million views on Weibo. Many homeowners, like Jason Wang in Shandong province, have seen property values sink by a quarter since 2019. "When people can barely feed themselves, who can afford to buy a house?" he asked.