【Epoch Times, April 17, 2026】
SOHO China founder Pan Shiyi recently reflected in an article, looking back on the development of China’s real estate industry over the past thirty years. He pointed out that the industry is now on the brink of collapse, with losses amounting to trillions of yuan. Pan analyzed that the root cause of the industry crisis lies in a “Ponzi scheme” and emphasized that the key to recovery lies in restoring integrity and protecting the rights of homebuyers.
Pan Shiyi published an article titled “My Reflection” on Thursday (16th), starting off by saying that when he gathers with friends, the topic always revolves around the significant events in the real estate sector, resulting in losses amounting to trillions of yuan and the entire industry being on the verge of collapse.
“We must face the road we have traveled over the past thirty years and acknowledge that the ‘tuition fee’ has been too costly,” he said. “What exactly is the root cause of the problem?”
In the article, Pan Shiyi mentioned that thirty years ago, China did not have a true real estate market. “The year 1998 was a turning point – the country decided to no longer allocate welfare housing and shifted towards commercial housing.”
Initially, commercial housing only appeared in special economic zones. “To stimulate home purchases, banks began providing loans to homebuyers, known as ‘mortgages.’ The rationale was that providing loans to homebuyers was better than to developers because homebuyers were the ones genuinely interested in buying homes, making the risks relatively controllable.”
“At the beginning, it was a fifty percent down payment, which equated to a leverage of one time. However, there was a significant disparity between market performance and the expectations of the government and banks. As a result, the down payment ratio kept declining – from forty percent to thirty percent to twenty percent, leading to increasingly higher leverage.”
“Absurd things started to happen: some real estate developers and banks collaborated to offer a five percent down payment, which means borrowing money twenty times the amount one actually put in. More absurdly, some proposed ‘zero down payment.'”
Pan Shiyi mentioned that he explicitly opposed the “zero down payment” scheme on a CCTV program at that time, believing that the leverage of “zero down payment” was infinite, allowing one to buy a house without spending a penny, entirely gambling with other people’s money, with no bottom to the risks. However, when the program aired, all his remarks were cut.
Pan Shiyi pointed out directly that the core problem of the industry is not the rapid rise in house prices but the alteration of the operational mode. “While the industry appears prosperous on the surface, it is becoming increasingly fragile, more reliant on subsequent people putting in money, continuous financing, and rising price expectations to cover previous commitments and loopholes.”
Pan Shiyi once visited a real estate site and found that “many people lining up were not there to buy houses to live in, but by default, they believed the prices would rise, and there would always be someone willing to pay a higher price. When I left, a colleague asked me for my thoughts. I summed it up in four words: Ponzi scheme.”
Reflecting back, Pan Shiyi said, “Not all of the people lining up back then were speculators; many were just caught up in what appeared to be an eternal chain of price increases. Within that chain, everyone believed they could exit before the music stopped. However, in the end, only a few could truly leave.”
He believes that the current state of China’s real estate market is not solely the fault of certain real estate developers. “From an industry perspective, the path these enterprises ultimately took can be summed up in four words: Ponzi scheme.”
According to public data, China’s real estate sector has been in decline for 47 consecutive months.
“Of course, reaching this stage is not solely the problem of enterprises; it is the result of the combined influence of institutions, finance, local finance, corporate expansion, and societal expectations.”
Pan Shiyi believes that business failures are not frightening as long as the bottom line of integrity is maintained. The worst outcome is company bankruptcy, with the losses mainly borne by themselves, without causing significant harm to others, the economy, or society.
“What is truly lethal is when an industry gradually deviates from integrity, building its business model on continuous leverage, financing, and finding someone else to take over. Even more dangerous is when some intentionally manipulate and create illusions, pulling more and more people into the scheme.”
He believes that departing from integrity, relying on leverage and speculation, is the fatal cause of the industry’s severe impacts, asserting that controlling risks and leaving room for maneuverability can only be achieved by upholding integrity.
“Integrity is the bottom line. By sticking to this bottom line, even if mistakes are made, there is still room for correction. Once this bottom line is lost, regardless of the size of the industry or the rate of growth, it could all collapse overnight.”
In conclusion, he stated, “To revive the real estate market, confidence is crucial. When dealing with lingering issues, the homebuyers must always be a top priority.”
Pan Shiyi was born in 1963 in Panji Village, Tianshui City, Gansu Province. In 1995, he and his wife, Zhang Xin, co-founded SOHO China Limited. The couple stepped down from management in 2022 but retained their positions as directors. Subsequently, there were reports indicating that the couple had settled in New York, USA.