China’s real estate sector has been a pillar of the nation’s economic growth for decades. However, mounting debt, slowing sales, and the ripple effects of the Evergrande crisis have placed unprecedented stress on the industry. In a bid to prevent another major collapse, Beijing is stepping in with a 50 billion yuan ($6.8 billion) financial aid package for China Vanke Co., one of the country’s largest state-backed developers.

This intervention underscores the Chinese government’s selective approach to market stabilization. Unlike Evergrande, which was left to default, Vanke benefits from a more conservative financial structure and state backing. The proposed strategy involves utilizing special local government bonds to purchase unsold properties and vacant land from Vanke, providing the company with much-needed liquidity to meet debt obligations.

China’s real estate boom, once driven by rapid urbanization and speculative investments, has entered a cooling phase since 2020. Stricter financial regulations, including the “Three Red Lines” policy aimed at curbing excessive borrowing, have put pressure on developers. Sales have slowed, home prices have declined in key regions, and liquidity issues have forced firms into financial distress. The collapse of Evergrande in 2021, one of the country’s largest developers, sent shockwaves through the market, exposing systemic vulnerabilities.

Beijing’s response has included interest rate cuts, mortgage rule easing, and financial support for key players like Vanke. While major cities like Shanghai, Beijing, Shenzhen, and Guangzhou still show relative demand, growth has weakened nationwide. Additionally, demographic shifts—such as an aging population and declining birth rates—pose long-term challenges for property demand.

The fate of China’s real estate sector holds global economic implications. The industry contributes significantly to GDP, employment, and consumer wealth. Struggles within the sector affect construction, banking, and supply chains worldwide. While the 50 billion yuan relief plan for Vanke provides short-term stability, the long-term trajectory of the market remains uncertain. Observers continue to monitor how government policies will evolve to manage debt levels while ensuring financial stability.