On April 13th and 14th, a former Chinese billionaire bowed his head in court at the Shenzhen Intermediate People's Court. Xu Jiayin, the legendary founder of EVERGRANDE, after more than two years of judicial proceedings, pleaded guilty and expressed remorse during the first-instance trial. As the court announced that sentencing would be scheduled for a later date, a vast commercial empire spanning real estate, finance, sports, and cultural tourism faced its final judgment before the law.
The trial involved nine charges. EVERGRANDE Group was accused of six crimes including illegal absorption of public deposits, fundraising fraud, illegal loan issuance, fraudulent securities issuance, unlawful disclosure of important information, and corporate bribery. EVERGRANDE Real Estate was charged with fraudulent securities issuance. Xu Jiayin personally faced nine accusations, including illegal absorption of public deposits, fundraising fraud, illegal loan issuance, illegal use of funds, fraudulent securities issuance, unlawful disclosure of important information, embezzlement, and corporate bribery.
The two-day trial featured investigations and debates centered on the alleged facts. Some National People's Congress delegates, members of the Chinese People's Political Consultative Conference, relatives of the defendants, and representatives of fundraising participants attended the proceedings. Legal analysts suggested that given the enormous sums involved, the large number of victims, and the resulting financial risks and social impact, which are almost unprecedented in mainland China, Xu Jiayin is highly likely to face severe criminal penalties.
Just eight months before Xu Jiayin's court appearance, the company he founded, EVERGRANDE, completed its final chapter in the capital markets. On August 25, 2025, the Hong Kong Stock Exchange officially delisted EVERGRANDE, ending its approximately 16-year listing history. Before trading was suspended, EVERGRANDE's share price was merely HK$0.16 per share, with a total market capitalization of about HK$2.152 billion, having evaporated over 99% from its historical peak of more than HK$370 billion.
EVERGRANDE's development trajectory is a near-perfect microcosm of China's real estate sector's rapid expansion era. In 1996, Xu Jiayin founded EVERGRANDE Industrial Group in Guangzhou, initially focusing on residential development. The turning point came with China's 1998 housing system reform, when the State Council officially ended the allocation of physical housing and gradually monetized housing distribution, ushering in the commercial housing era.
From 1998 to 2021, China's urbanization rate rose from 33% to nearly 64%, and national real estate development investment grew from over 300 billion yuan to nearly 15 trillion yuan. Xu Jiayin led EVERGRANDE to seize every opportunity during this dramatic urbanization process. In 2006, the company relocated its headquarters from Guangzhou to Shenzhen, beginning national expansion. In 2009, EVERGRANDE successfully listed on the Hong Kong Stock Exchange, with its share price rising 34.3% on the first day, achieving a market capitalization exceeding HK$70 billion.
Post-listing, Xu Jiayin embarked on rapid capital expansion. He acquired the Guangzhou football club for 100 million yuan, ultimately investing over 17 billion yuan in football. He subsequently ventured into bottled water, grain and oil, dairy, healthcare, finance, and new energy vehicles, building a diversified portfolio including EVERGRANDE Football, EVERGRANDE Spring Water, EVERGRANDE Health, and EVERGRANDE Auto. Xu Jiayin once stated, "Diversified development is absolutely not a temporary expedient for us."
EVERGRANDE peaked in 2020, achieving sales of 723.2 billion yuan, sales repayments of 653.2 billion yuan, revenue of 507.2 billion yuan, and a net profit of 31.4 billion yuan. Xu Jiayin announced the arrival of the "New EVERGRANDE" at an earnings conference, comprising eight industrial platforms: real estate, automobiles, property services, Hengten Network, Fangchebao, EVERGRANDE Fairyland, healthcare, and EVERGRANDE Spring Water.
However, EVERGRANDE's success was built on a highly fragile foundation—a "three-high model" of high leverage, high debt, and high turnover. This model worked well during industry upswings but amplified risks drastically when policy conditions reversed. In August 2020, the People's Bank of China and the Ministry of Housing and Urban-Rural Development introduced the "three red lines" rules for monitoring funding and financing management of key real estate enterprises, requiring specific debt and liquidity ratios.
Subsequent stricter regulations, including controls on real estate loan concentrations and commercial paper oversight, significantly narrowed financing channels for developers. The "three red lines" became a watershed moment, rewriting the industry's fundamental logic and rendering the old development model unsustainable. For EVERGRANDE, this meant the erosion of its core survival strategy.
In 2021, EVERGRANDE's liquidity crisis erupted: overdue commercial paper, halted projects, and defaulted wealth management products followed one after another. As of June 30, 2021, out of EVERGRANDE's total assets of 2.38 trillion yuan, 1.97 trillion yuan came from liabilities, resulting in an asset-liability ratio of 82.71%. Even excluding contract liabilities from presold properties, the ratio remained around 81%.
The financial figures were staggering. In 2021 and 2022, EVERGRANDE accumulated losses exceeding 810 billion yuan, with a single-year loss of 686.2 billion yuan in 2021, setting a record for annual losses by a Chinese company. By the end of 2022, total liabilities reached 2.44 trillion yuan, or 1.72 trillion yuan excluding contract liabilities, indicating technical insolvency.
EVERGRANDE Wealth Management was a key trigger of the crisis. It illegally raised funds by promising high returns, collecting approximately 92.1 billion yuan through fixed-income products. A sales manager and investor revealed that over 80,000 people, including EVERGRANDE employees and their families and friends, purchased wealth management products through the company, raising more than 100 billion yuan over five years. Media reports indicated that about 30 billion yuan in principal and interest remained unpaid as of the trial.
In September 2023, Du Liang, general manager of EVERGRANDE Wealth Management, and other suspects were subjected to criminal compulsory measures. In January 2024, the Hong Kong High Court issued a winding-up order for EVERGRANDE. Subsequently, liquidators took control of global assets belonging to Xu Jiayin valued up to $7.7 billion, and his offshore trust structure was effectively pierced by a Hong Kong court ruling.
EVERGRANDE's fate is intricately linked to China's real estate cycle. Following the 1998 reforms, the sector experienced over two decades of rapid growth, cementing the high-leverage, high-debt, high-turnover model. However, with the establishment of the "housing is for living, not speculation" principle and policies like the "three red lines," the industry is undergoing profound structural adjustment. The EVERGRANDE case symbolizes a historic turning point from scale expansion to high-quality development.
Xu Jiayin's trial represents the final stage in a series of accountability measures. Prior to this, administrative penalties had already been imposed. In May 2024, the China Securities Regulatory Commission fined EVERGRANDE Real Estate 4.175 billion yuan for fraudulent bond issuance and information disclosure violations, levied a maximum fine of 47 million yuan on Xu Jiayin, and banned him from the securities market for life. The regulator stated that Xu had directed others to inflate EVERGRANDE Real Estate's annual report results through "particularly egregious means under especially serious circumstances."
Simultaneously, asset recovery efforts advanced. In September 2025, the Hong Kong High Court ordered EVERGRANDE's liquidators to take control of Xu Jiayin's assets, appointed supervising lawyers, and issued a worldwide injunction prohibiting disposal of assets worth up to $7.7 billion. Thirty-three offshore companies linked to the Xu family and seven bank accounts opened in his name or under offshore entities were frozen or taken over.
Disposal of EVERGRANDE's domestic and overseas assets accelerated. In April 2026, EVERGRANDE Property Services announced that its controlling shareholder, EVERGRANDE, had entered an exclusivity agreement with a selected bidder for a potential equity transaction, initiating a 30-working-day exclusive negotiation period. Market sources reported that during the trial, Xu's "lucky house" in Tsim Sha Tsui was sold for HK$3.2 million, above the court-approved reserve price.
Although the verdict in Xu Jiayin's case is pending, its significance extends far beyond the individual circumstances. Firstly, the trajectory from "richest man" to "defendant" serves as a warning that capital must operate within a legal framework. Xu's rise was fueled by historical opportunities in urbanization and real estate sector policies, but his fall resulted from crossing legal boundaries—from unlawful information disclosure to illegal fundraising, embezzlement, and bribery. EVERGRANDE's "wild growth" ultimately incurred heavy legal costs.
Secondly, the crisis exposed the unsustainability of high-leverage expansion models. The People's Bank of China, commenting on the EVERGRANDE incident, noted the company's "poor management, failure to operate prudently amid market changes, and blind diversified expansion leading to severe operational and financial deterioration and eventual risk eruption." From football to water and automobiles, Xu attempted to replicate success across sectors using real estate profits, but diversification hastened the cash flow breakdown.
Thirdly, EVERGRANDE's collapse represents a profound cleansing by law and the market. From administrative penalties to criminal trials, and from domestic asset freezes to piercing offshore trusts, the coordinated accountability efforts by judicial and regulatory authorities send a clear signal: no enterprise, regardless of size, is above the law.
Regardless of the outcome, the Xu Jiayin case will become an unavoidable chapter in modern Chinese business history. It marks the end of one era and the beginning of another—as the real estate sector moves beyond the period of wild growth, a more regulated, transparent, and law-based market ecosystem is being reshaped. For entrepreneurs still navigating the market, the greatest lesson from this story may be that genuine business success is never achieved by trampling legal red lines. Upholding legal boundaries and respecting market principles are the fundamental tenets for sustainable enterprise.
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