Chinese Property Developers are going BANKRUPT!

China is an investment-led economy, not export-led as some people would think, meaning that property sales are the backbone of the Chinese economy.
In 2021 for example, local governments in China earned 40 percent of their total revenue from the sale of land-use rights. Local governments dramatically raise the price of land, subsequently of real estate, because they use high-priced land as collateral to get credit from local banks. Over in debt and an almost unrestricted increase in infrastructure projects whose economic benefits are questionable have become unavoidable. This has resulted in China’s local government debt reaching $23 trillion.
Housing assets account for about 70 percent of the wealth of Chinese households, and real estate accounted for 14 percent of GDP in 2022. Once this industry slumps, the wealth of the Chinese people, especially the middle class, will shrink drastically.
Many local governments, which used to rely on the property bubble to support their projects, have been plunged into crisis, and in some areas, even the salaries of teachers, public transportation, municipal employees, or public security officers cannot be paid as a result. Currently, Chinese officials categorize 14 out of 31 provinces as being in financial crisis.
Now that's the government situation but what about the private side?
Developer Country Garden is at risk of default, Evergrande has filed for bankruptcy protection and firms covering 40% of Chinese home sales have defaulted.

China’s property crisis is deep with two major developers facing severe financial difficulties that threaten to send shock waves through the country’s economy and beyond.
Evergrande, the poster child for the woes of China’s property sector, filed for bankruptcy protection in New York.
The filing from Evergrande, which defaulted in 2021 after a liquidity crisis, came a day after China’s securities regulator notified the company’s Chinese branch that it was being investigated for suspected disclosure violations. It is the world’s most indebted property developer, with more than $300bn in liabilities.
Country Garden, which was once China’s largest property developer by revenue, also faces a risk of default.
Country Garden is one of the few major homebuilders to have avoided default since Beijing introduced a “three red lines” policy in 2020 that was aimed at reining in the debt levels in the highly leveraged sector. The red lines set limits on liabilities-to-asset ratios and ensure companies hold cash reserves equivalent to at least 100% of short-term debt.
Since then, companies responsible for about 40% of Chinese home sales have defaulted. Country Garden, has also missed two dollar bond payments.
Country Garden’s liabilities total 1.4tn yuan (£151.1bn), about 60% the size of Evergrande’s. But Country Garden has nearly four times as many housing projects in China, leading to fears of more social unrest if construction halts. There have already been reports of demonstrations outside the company’s headquarters in Guangdong.
The company has promised to deliver 700,000 units this year, but in the first six months, it completed less than half that number. The industry is in an “unprecedented difficult period”, the company said in a filing.
As confidence in the real estate sector has plummeted, so have home sales, depriving developers of needed cash to complete construction works and meet interest payments. Country Garden’s sales were down by 60% for example.
The turmoil in China’s property sector has left suppliers unpaid, and homebuyers, who have often made hefty down payments, without their apartments. Buyers in hundreds of cities have staged mortgage boycotts in protest at the unfinished developments, that doesn't really matter in a communist country but good luck anyway.