【Epoch Times News December 24, 2025】Once the largest real estate developer in China, Vanke, recently faced the imminent maturity of a 2 billion Chinese yuan bond, ultimately receiving support from bondholders at the last minute. The grace period was extended by 30 trading days, providing temporary breathing room. The focus now turns to whether Vanke will ultimately default and undergo debt restructuring in the absence of any substantial rescue efforts.
Experts believe that Vanke is likely heading towards debt restructuring. As of now, the Chinese Communist Party has not implemented any market rescue policies, indicating that the problem has escalated to the point of “abandoning rescue efforts,” with little improvement expected within the next three to five years.
According to an announcement from the Shanghai Clearing House, the resolution to extend the grace period for Vanke’s “22 Vanke MTN004” bond received approval from bondholders, extending the original 5-day grace period that was set to expire on December 22 to 30 trading days, ending on January 28 next year.
Reported by Bloomberg, Standard & Poor’s on Tuesday (23rd) viewed this extension of the grace period as a distress debt restructuring, equivalent to a default, downgrading Vanke’s long-term corporate credit rating from “CCC-” to “SD,” meaning selective default.
Credit rating agency Moody’s had already downgraded Vanke’s credit rating by two notches to “C” last week, stating that the company failed to fulfill its debt obligations and warning that if the company fails to repay after the grace period, the rating could be further downgraded to “Restricted Default.”
Renowned multinational investment bank Goldman Sachs pointed out in a recent research report that since 2022, over 20 developers’ debt restructuring plans have been approved. As of October 2025, the estimated cumulative debt restructuring scale has exceeded 1.2 trillion yuan. In the absence of broader funding support, asset disposal, and refinancing plans, Vanke is likely to resort to market-oriented comprehensive debt restructuring.
Bloomberg reported that Vanke is still trying to persuade investors to accept the extension of the 3.7 billion yuan bond due on December 28. Without any rescue action, Vanke is expected to continue approaching potential restructuring or default in the coming months.
This implies that Vanke must renegotiate and strive to achieve a delayed repayment agreement with bondholders no later than January 28 next year. If negotiations fail, the company faces default risk and may initiate an overall debt restructuring. In the event of default, Vanke’s approximately 50 billion US dollar interest-bearing debt could escalate industry risks, and if a restructuring occurs, it would become one of the largest in China’s history.
However, analysts at Barclays pointed out that about 45% of Vanke’s approximately 50 billion US dollars of debt burden is unsecured. In the event of a forced restructuring, these debts would be extremely vulnerable.
Zerlina Zeng, Head of Asian Credit Strategy at CreditSights, indicated that the execution risk is high, and Vanke might need to repeatedly apply for grace period extensions until a comprehensive debt restructuring is pursued.
Bloomberg reported that as a state-owned real estate company, Vanke possesses around $160 billion in assets and over 125,000 employees, but has been mired in a liquidity crisis for several months. Since late November, the company has been requesting delays in payments for domestic yuan bonds, while signs of weakening government support have emerged in the market.
American economist David Huang, in an interview with NTDTV, commented that Vanke has always been seen as a benchmark real estate enterprise with a relatively healthy financial background due to state ownership. Now, even such companies are seeking extensions from bondholders, indicating that the pressure on the entire industry is not isolated but widespread, affecting even the top real estate companies. The government may lean towards market-oriented restructuring to buy time, hoping to shift the debt burden to the market.
According to statistics from the China Index Research Institute, Vanke faces 5.7 billion yuan in credit bonds due in December 2025 and 12.366 billion yuan in credit bonds due in 2026.
Reuters reported last month that the China International Capital Corporation (CICC) has been brought in to assess Vanke’s debt, with debt restructuring as one of the options. In the event of a debt restructuring, Vanke’s interest-bearing debts could reach as high as 364.3 billion yuan (around 52.32 billion US dollars), potentially surpassing Evergrande and Country Garden’s default events.
Around 30% of Vanke’s shares are held by the state-owned Shenzhen Metro Group. Some analysts previously believed that the support of the “national team” would be sufficient to help Vanke avoid financial difficulties.
Regarding this, Professor Jiazhong Fan from National Taiwan University’s Department of Economics mentioned to Epoch Times that expecting Shenzhen Metro to continually inject funds into Vanke without limits is an unrealistic expectation. Firstly, Shenzhen Metro has no reason to do so, and it may not have the capacity to do so given the immense financial burden. This pit is so vast that no state-owned enterprise or local government has the ability to fill this bottomless pit.
Fan stated that it is possible the central government will take numerous measures to delay the inevitable. However, ultimately, Vanke will declare bankruptcy, undergo restructuring, and enter the liquidation process. It’s just a matter of time.
He also noted that the policies implemented by the Chinese government, including those from the next five-year plan and the Central Economic Work Conference, show no active measures to alleviate the real estate sector, revealing that it is no longer a priority. Essentially, the severity of China’s real estate issues has reached a point where attempts for recovery have been abandoned.
In response to Shenzhen Metro ceasing financial aid to Vanke, mainland China economist Wang Guochen, a research fellow at the Chinese Academy of Economies, shared three insights with Epoch Times. First, urban investment (urban construction investment) and land finance are both shrinking, and Shenzhen Metro lacks the financial capability to assist Vanke has reasons to question. Secondly, knowing that a risky company on the verge of bankruptcy is receiving loans could raise suspicions of implicit corruption, potentially leading to corruption charges.
Thirdly, Xi Jinping has stated a desire to protect the real estate sector while advocating “housing for living, not speculation.” Hence, officials or banks are proceeding cautiously step by step, unwilling to take proactive measures.
Following the collapses of large real estate companies like Evergrande and Country Garden, Vanke, once heralded as the most financially stable and internationally backed real estate company, is now on the brink of collapse, further worsening the real estate industry’s predicament.
In light of the continued downturn in China’s real estate market, there has been a surge in “bank-supplied housing” recently, where banks directly sell unredeemed mortgaged properties typically at 70% or even 50% of the market price.
Wang Guochen mentioned that due to unclear central government policies, real estate companies are worsening, leading to the emergence of “bank-supplied housing.” This practice skips the judicial auction process by allowing banks to buy back properties directly from residents who cannot repay their loans. By doing so, banks can acquire these properties at a lower price, anticipating further declines in property values over three years.
The National Bureau of Statistics of China announced on the 15th that from January to November this year, the national real estate development investment reached 7.8591 trillion yuan, a significant decrease of 15.9% from the same period last year. Residential investment declined by 15.0%. The annual growth rate of real estate development investment in China from 2022 to 2024 fell by 10.0%, 9.6%, and 10.5%, respectively.
Regarding this, Wang Guochen explained that developers are increasingly reluctant to invest now, with real estate development investment declining for over three years. They are unable to continue constructing existing buildings, indicating that the problem will only worsen.
“However, as the CCP prevents their bankruptcies, they will continue to receive financial injections gradually to keep these developers afloat, allowing them to continue building houses. If there is a real estate crisis, then the banks’ taps will open wider because of central orders. If the central government does not issue orders and stops monitoring, the banks will tighten their faucets to prevent affecting their own bad assets and to avoid corruption issues.”
“In a process of gradually opening and closing the taps, developers will continue building, hiring employees, persisting in unstable real estate projects. They aim to complete the projects to ensure those who purchase pre-sold houses can have a place to live.”
Wang Guochen emphasized that in reality, these companies are already running at a loss, but the illusion that these companies have not collapsed is maintained for the hope that sales of pre-sold houses will continue. If these companies collapse, the pre-sold houses vanish, potentially leading to public unrest. This situation will eventually become uncontrollable.
Fan also mentioned that the real estate industry is intertwined with numerous upstream and downstream industries. With the real estate sector suffering, it naturally drags along associated industries, resulting in widespread distress across China in recent years. Many international reports, including Bloomberg’s projections, suggest that China’s real estate market may not stabilize until 2027.
Fan added that after the bursting of the Japanese economic bubble, the real estate market endured a nearly ten-year downturn, followed by another decade of stagnation. Similarly, a recovery for the Chinese real estate market seems distant, with related industries unlikely to see much improvement in the next three to five years.