Hong Kong
The founder of embattled property behemoth Evergrande and formerly one of China’s richest men was sentenced to life in prison on Thursday, according to state media, the latest chapter of ignominy for a one-time symbol of the nation’s economic boom.
Hui Ka Yan pled guilty in April to multiple charges related to his time as chairman of China’s largest real-estate developer, including fraud and misuse of funds.
It completes a dramatic downfall for Hui – also known as Xu Jiayin – who emerged from humble origins during a turbulent political era, to climb to the highest levels of influence and wealth.
Hui’s Evergrande Group has been hobbled by debt since 2021, with $300 billion in liabilities. Its crisis – along with those of other property giants – has been at the heart of a wider Chinese real-estate shock that has tested the world’s second-largest economy and threatened to spark a global contagion effect.
As well as the life sentence, Hui was also ordered to forfeit his personal assets and was stripped of all political rights, China’s official Xinhua news agency reported, citing a verdict handed down by a court in the southern metropolis of Shenzhen.
Evergrande Group was fined 8.82 billion yuan ($1.23 billion), and Evergrande Real Estate was fined 7 billion yuan, it said – some of the biggest corporate criminal fines ever handed down by the Chinese government.
Hui and Evergrande Group were found guilty of several charges, including financial fraud; inflating assets and concealing liabilities; illegally absorbing public deposits; fundraising fraud; and illegal disclosure of important information.
The sentences mark a key moment in China’s continuing real-estate crisis, which has dented consumer confidence in the country – and caused a headache for a government that stakes its legitimacy on rising prosperity.
“The criminal conduct of China Evergrande Group, Evergrande Real Estate, and Hui Ka Yan seriously disrupted the order of the socialist market economy, infringed upon public and private property rights, and undermined the integrity of public officials in the performance of their duties,” said the verdict.
Hui’s is a classic rags-to-riches story.
Born in the late 1950s in a small village in central China’s Henan province, he was raised by his paternal grandmother.
After graduating from high school in 1975, he took jobs on a farm and as a security guard. He passed the college entrance exam at the second attempt in 1978, and studied metallurgy at Wuhan Institute of Iron and Steel, relying on scholarships and stipends to pay his way.
He began his working life at a steel mill. But in 1992, with 20,000 yuan (or less than $3,000) in savings, he headed to the burgeoning city of Shenzhen, across the border from the then British colony of Hong Kong, to pursue his real-estate dreams. Two years later, he executed his first project in Guangzhou, also in Guangdong province.
In 1996 he started the company that would launch him to national significance and unimaginable riches. Over the next two decades, Evergrande built many of the homes, office blocks and urban structures that powered China’s miraculous economic growth.
At its height, it had about 200,000 employees, raked in more than $110 billion in sales and owned more than 1,300 developments in more than 280 cities. It bankrolled a soccer club, Guangzhou Evergrande, which became champion of China and Asia.
Real estate and related industries used to account for as much as 30% of GDP in China. Analysts had long worried that a collapse of Evergrande could trigger wider risks for China’s property market, hurting homeowners and the broader global financial system.
During China’s property boom years, many developers, including Evergrande, amassed huge debts to build housing, feeding demand as the country grew wealthier. An eventual oversupply of housing has now led to whole ghost districts and empty projects in many places.
Last year, new home sales in China dipped to their lowest value since 2014, according to official statistics, totaling only 7.3 trillion yuan ($1.06 trillion), versus 16.2 trillion yuan ($2.3 trillion) in 2021, at the height of the boom. Beijing has issued many measures over the past several years to stabilize the property market; however, there is no end to the crisis in sight.