China’s property sector retreats into state hands
Subscribe to enjoy similar stories. More than three years into China’s housing crisis, there is still no sign of its ending. Now, as private and locally-owned developers keep faltering, the sector is becoming more state-dominated.
That marks a stunning reversal for an industry that has been a poster child for China’s economic development. The latest private builder to run into a liquidity crisis is China Vanke, one of the country’s largest remaining developers. But state intervention has pulled it back from the brink of potential default, for now.
This week, it projected a loss of 45 billion yuan, the equivalent of $6.3 billion, for 2024. Its chairman has resigned, replaced by the chairman of its largest shareholder, Shenzhen Metro. Representatives from the state-owned subway operator for the wealthy southern city of Shenzhen now make up nearly half of Vanke’s senior management.
It will also buy a couple of projects from Vanke. Vanke’s bonds have been plummeting in recent weeks, prompting the Shenzhen government to step in. The company has 33 billion yuan of bonds maturing this year, according to J.P.
Morgan. In China’s boom years, private property developers transformed city skylines and minted huge fortunes for their founders. But their collapses have become commonplace in recent years.
China Evergrande, Country Garden and Sunac are among some of the biggest. Each of them had annual contracted sales of more than 500 billion yuan ($69.5 billion) in their peak years. But Vanke is a special case.
While it isn’t officially a state-owned company, it has intricate links with the government. In fact, Vanke traces its roots to a state-owned company founded in 1984 for the import and sale of office equipment. The company then
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