HONG KONG (AP) — State-backed property developer China Vanke, once the country’s largest homebuilder by sales, narrowly avoided defaulting on a 2 billion yuan ($284 million) bond last week as the painfully slow recovery in China’s property market drags on.
The Chinese developer also was seeking to delay repayment of another 3.7 billion yuan ($530 million) of onshore debt due on Dec. 28, with bondholders agreeing to extend the deadline to February.
Years after the downturn in the housing market began, Chinese developers are still struggling to regain their footing, despite a slew of government policies meant to revive the industry. Weak investment and housing prices have shaken investor confidence, spilling into the broader economy since millions of homeowners are stuck with apartments worth far less than what they paid for them.
Instead of the huge driver of prosperity that it once was, the property market is weighing on the economy.
Vanke’s predicament
Although Vanke’s bondholders have approved extensions for repayments of its debt, the risk of a default remains.
About a third-owned by Shenzhen Metro, a state-owned railway, publicly listed Vanke’s finances are a mess. Its revenue fell 27% from a year earlier in the latest July-September quarter, and several of its onshore bonds were suspended from trading after prices plunged.
The developer owes more than $50 billion, less than the more than $300 billion in debt racked up by China Evergrande, one of the first property dominos to fall when it defaulted in 2021 after the government cracked down on excessive borrowing in the industry.
Analysts say Vanke, founded in the 1980s in the southern boomtown of Shenzhen, may be testing the limits of state support for property developers in reviving the industry, which once accounted for more than a quarter of total economic activities in China.
China’s property sector is still in the doldrums
More than four years after the downturn began, China’s property sector has yet to recover. The situation varies from city to city, but overall home prices have fallen by 20% or more from their peak in 2021.
The decline has continued, with new home sales falling 11.2% by value year-on-year in the first 11 months of 2025, according to official statistics. Property investments fell nearly 16% from a year earlier.
The slump has caused massive layoffs, hurting overall consumer confidence and spending.
“The continued slide in the property market remains one of the most significant risks to China’s efforts to shift to a domestically demand-driven growth model,” wrote Lynn Song, chief economist for Greater China at ING Bank, in a recent commentary.