In Depth: Market Realities Frustrate China’s Efforts to Clean Up Developer Debt

Since the market was clobbered by a cash crunch late last year, authorities have encouraged healthy real estate companies to buy the assets of their distressed peers. Photo: VCG

Over the past two months, Sunac China Holdings Ltd. and Shimao Property Holdings Ltd., two debt-ridden Chinese private developers, have sold projects worth billions of yuan to state-owned firms.

That marks a sharp reversal from 2018 to 2019 when the two companies went on a shopping spree spending tens of billions of yuan to expand their businesses.

How times have changed. China’s real estate industry — once a breeding ground for new billionaires — has degenerated into a minefield of murky debt risk that threatens its status as a pillar of economic growth.

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