The rise and demise of Chinese property giant Evergrande

In this file photo taken on August 6, 2021, the China Evergrande Centre is seen in the Wan Chai district of Hong KongAFP

Debt-mired Chinese developer Evergrande, struggling to appease angry homebuyers and investors, saw its shares plunge on Thursday as they resumed trading in Hong Kong.

Fears of an imminent collapse of the group and its impact on the Chinese economy have rattled markets.

Here is a timeline of Evergrande’s rise to become one of China’s biggest developers, and demise into one of its worst debtors:

1996: The dream begins

Steel-factory worker Xu Jiayin starts Evergrande, targeting millions of middle-class Chinese climbing onto the property ladder across the rapidly urbanising country.

2009-10: Start of expansion

After going public in 2009, Evergrande takes control of Chinese Super League club Guangzhou, renaming it Guangzhou Evergrande, and spends billions of dollars on foreign players, helping it to win a succession of titles.

The company also moves into the dairy, grain and oil businesses and later tries to build an electric car—kicking off a debt-fuelled spending spree.

2017: Richest man in Asia

Xu becomes the richest person in Asia with a net worth of $43 billion.

2018: Central bank raises red flag

In November, the first signs of trouble emerge when China’s central bank adds Evergrande to its list of highly indebted conglomerates to watch, flagging that a potential collapse could cause systemic risks.

August 2020: ‘Three red lines’

Regulators announce caps for three different debt ratios in a scheme dubbed “three red lines”, which tightens lending to the real estate sector.

Evergrande sells 28 percent of its property management unit for $3 billion and starts offloading properties at increasingly steep discounts.

June 2021: Scrutiny on home deposits

As part of a crackdown on the property sector, regulators tighten scrutiny on the controversial practice of taking deposits from homeowners before a house is completed, a major source of funding for developers.

Under the new rules, local governments will set a maximum cap on deposits, hold deposits and release funds to developers in batches after inspecting the progress of projects.

Research firm Capital Economics estimates that Evergrande had 1.3 trillion yuan (more than $207 billion) in pre-sale liabilities at the end of June, equal to roughly 1.4 million homes it had committed to building.

August 2021: Court battles

An advertiser sues the company for unpaid dues, the first in a string of cases filed by nervous subcontractors. Work at several construction sites grinds to a halt.

Global ratings companies including Fitch, Moody’s and S&P downgrade Evergrande’s outlook to negative, making it harder for the troubled firm to borrow money and raising fears of a possible bankruptcy that many fear could reverberate through the world’s number-two economy.

Evergrande says in a stock market filing that its total liabilities have swelled to 1.97 trillion yuan ($305 billion) and that it is facing the “risks of defaults on borrowings”.

September 2021: Public protests

As fears mount about its future, Evergrande says it is under “tremendous pressure” and may not be able to meet its liabilities. It warns that negative media coverage and rumours have led to waning confidence and falling property sales during a normally buoyant September selling period.

Public protests erupt outside the company’s headquarters in Shenzhen and other locations across China, with angry investors and homebuyers demanding repayments.

October 2021: Stocks plunge

Evergrande suspends trading on the Hong Kong stock exchange on October 4 pending an announcement on a “major transaction”.

The company had already missed several payments, with a 30-day grace period on an offshore note due in late October.

China’s central bank says mid-October that risks for the wider financial sector from Evergrande’s crisis were “controllable”, in a bid to calm fears of financial contagion.

Evergrande shares resume trading on October 21, plunging more than ten percent at the open—hours after the company said a $2.58 billion deal to sell a major stake in its property services arm had fallen through.