BEIJING: For property giant Evergrande, the face of China’s real estate woes, an excruciating saga that has dragged on for years culminated on Thursday (Aug 20) with court rulings ordering fines and jail terms.
The court in Shenzhen city said it sentenced founder Xu Jiayin to life in prison and fined Evergrande Group and an affiliate more than US$2 billion for fraud and other offences.
While the verdict caps the fallout from Evergrande’s collapse, challenges posed by a stubborn slump in the once-booming property sector still loom large for China and its leaders.
AFP breaks down Evergrande’s fall and what it means for the world’s number-two economy:
WHY DID EVERGRANDE COLLAPSE?
Evergrande was once China’s leading property developer, propelled by decades of rapid urbanisation and rising living standards across the country.
Listed in Hong Kong in 2009, the firm surged to a peak market value of more than US$50 billion under the stewardship of Xu, also known as Hui Ka Yan.
But fortunes reversed in 2020, when new regulations from Beijing seeking to limit excessive borrowing in the real estate sector complicated Evergrande’s ability to make payments.
Subsequent years saw a drawn-out struggle across the industry to complete construction projects as shares plunged and cash flows dried up.
Evergrande’s 2021 default and the 2024 liquidation order by a Hong Kong court have become emblematic of the broader downturn in China’s once-mighty property sector.
In August last year, Evergrande shares were delisted from the Hong Kong Stock Exchange.
Xu pleaded guilty to charges of fraud and bribery in April during a public hearing at which he stood accused of “illegally absorbing public deposits, fundraising fraud, illegally issuing loans (and) illegally using funds”, among other crimes, a court statement said at the time.
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