Failure pattern · China · 1996–2024
Evergrande: the developer with over $300 billion of liabilities
Evergrande grew into one of China's biggest property developers by borrowing heavily and pre-selling homes. When Beijing tightened rules on debt, it defaulted and was ordered to liquidate.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- Founded
- 1996
- Liabilities (2021)
- over $300 billion
- ‘Three red lines’ policy
- August 2020
- Liquidation order
- January 2024
What happened
Hui Ka Yan founded Evergrande in 1996. It grew rapidly by buying land with borrowed money and pre-selling apartments before building them, using buyers' deposits to fund more projects. It also expanded into electric cars, bottled water, and a football club.
In August 2020 Chinese regulators introduced ‘three red lines’ limiting developers' debt. Evergrande could no longer borrow to keep the cycle going. By 2021 it had liabilities of more than $300 billion, and it defaulted on offshore bonds in December 2021. Hundreds of thousands of buyers waited for unfinished homes, and suppliers went unpaid.
In January 2024 a Hong Kong court ordered Evergrande's liquidation. Its collapse became a symbol of China's wider property crisis.
Timeline
- 2009
Lists in Hong Kong.
- 2020
Debt limits introduced.
- 2021
Defaults on offshore bonds.
- 2024
Liquidation ordered.
what went wrong
- Growth funded by ever-increasing debt and pre-sales.
- Diversification into unrelated businesses.
- Regulatory change ended the borrowing cycle.
the lesson
A business that needs constant new borrowing to survive is fragile — one rule change can end it.
Apply it to your business
- 1Check whether your model works without new debt.
- 2Don't use customer deposits to fund unrelated expansion.
- 3Stress-test your business against regulatory change.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.