At a Glance
- Vanke narrowly avoided defaulting on a 2 billion yuan bond last week.
- Bondholders extended repayment of 3.7 billion yuan debt to February.
- China’s property market still down 20% from 2021 peaks, with new sales falling 11.2% Y/Y in 2025.
- Why it matters: The developer’s struggle signals ongoing weakness in China’s real-estate sector and risks to broader economic recovery.
Vanke, once China’s biggest homebuilder, is grappling with debt amid a sluggish property market that has dragged on for years. The company’s recent near-default and extended bond payments highlight the fragility of state-backed developers and the wider economic implications.
Vanke’s Debt Crunch
Vanke’s revenue fell 27% in the July-September quarter, and several onshore bonds were suspended after prices plunged. The company owes more than $50 billion, far less than Evergrande’s $300 billion, but a default would still hurt confidence.
- State support: Shenzhen Metro Group has supplied over 29 billion yuan in shareholder loans this year.
- Cash position: Vanke reported 60 billion yuan in cash by the end of September, against short-term debt of about 151 billion yuan.
- Upcoming maturities: More than 9.4 billion yuan of bonds will mature over the next six months.
S&P Global downgraded Vanke to “selective default,” and Fitch Ratings to “restricted default,” viewing the bond extension as a distressed restructuring.
Foreky Wong, a founding partner at Fortune Ark Restructuring, stated:
> “This is one of the most significant, quasi state-backed developers that may be defaulting (on) their repayment.”
China’s Property Slowdown
Home prices have fallen 20% or more from 2021 peaks, new sales fell 11.2% Y/Y in 2025, and investments declined 16% Y/Y. The slump has caused layoffs and lowered consumer confidence.
| Metric | 2021 Peak | 2025 Y/Y |
|---|---|---|
| Home Prices | 0% | -20% |
| New Sales | 0% | -11.2% |
| Investment | 0% | -16% |
Lynn Song, chief economist for Greater China at ING Bank, wrote:
> “The continued slide in the property market remains one of the most significant risks to China’s efforts to shift to a domestically demand-driven growth model.”
Jeff Zhang, an analyst at Morningstar, added:
> “Without a strong commitment by the Shenzhen government on the bailout, we think Vanke’s liquidity profile should remain fragile.”
Key Takeaways
- Vanke avoided a 2 billion-yuan bond default but faces significant debt pressure.
- State-backed support is insufficient to cover all obligations.
- The ongoing property slump threatens broader economic recovery.
Vanke’s near-default underscores the fragility of China’s real-estate sector and the limits of state support, raising concerns about the country’s economic trajectory.
