Shenzhen Court Sentences Evergrande Founder Xu Jiayin to Life, Confiscates All Personal Property

Real estate was once seen as an important symbol of wealth in China. Wang Jianlin of Wanda Group and Xu Jiayin of Evergrande Group successively became China's richest people. Real estate companies expanded continuously, local governments obtained revenue by transferring land, banks made loans secured by real estate, and ordinary households treated property as one of their main assets. During this period, the pre-sale system enabled homebuyers to pay in advance; after developers obtained funds, they continued to acquire land, build and expand. Local governments obtained revenue through land transfers and invested it in infrastructure. As the urban environment improved, land and housing prices rose further. During the industry's rapid growth, high leverage and high turnover amplified the scale of corporate expansion.

On August 20, 2026, Xu Jiayin, founder of Evergrande Group, appeared before the Shenzhen Intermediate People's Court in Guangdong Province. The court sentenced him to life imprisonment and confiscation of all personal property. China Evergrande Group was fined a huge amount. The debt left by Evergrande Group reached RMB 2.4 trillion.

Evergrande Group's creditors include banks, suppliers and investors, as well as families that bought pre-sold homes but did not receive them. These parties face losses caused by the bursting of the real estate bubble. The 'three red lines' policy implemented around 2020 restricted financing for real estate companies.

When housing prices and sales no longer rose continuously, the role of high leverage in amplifying corporate expansion during the high-growth phase reversed and instead amplified risk. Real estate is closely linked to upstream and downstream industries such as construction, steel, home appliances and decoration. After entering a downturn, risks transmitted along the industrial chain to broader parts of the economy.

After the 2008 financial crisis, China increased infrastructure investment to sustain economic growth. As infrastructure investment expanded, more funds flowed into real estate. After real estate entered a downturn, investment shifted further toward manufacturing.

As real estate prices fell, household wealth shrank and willingness to consume declined, local governments' land revenue decreased, and developers and banks came under pressure at the same time. The real estate downturn changed the model in which households, developers, banks and local governments benefited from the cycle during the period of rising housing prices; the previous gains turned into losses that the relevant parties had to bear. The debt and risks left by the golden age of real estate involve multiple parties, including households, developers, banks, local governments and upstream and downstream industries.