The sentencing of China Evergrande founder Hui Ka Yan to life in prison has brought a legal reckoning for one of the country’s most spectacular corporate collapses. However, for hundreds of thousands of homebuyers, investors, and other creditors, the ruling does little to resolve the financial losses left behind by the property giant.
Chinese authorities also ordered the continued recovery of illegal proceeds and repayment of losses where funds remain insufficient. Fifty-six other people involved in related Evergrande cases, including Hui’s two sons, were given prison sentences ranging from 18 years to one year and 10 months, along with fines or asset confiscations.
The penalties, however, do not automatically compensate the people who lost money when Evergrande collapsed.
Evergrande accumulated about 2.4 trillion yuan ($360 billion) in advance payments from homebuyers for properties that had yet to be delivered. At the height of the crisis, the company had roughly 1.62 million unfinished housing units across more than 200 cities, affecting an estimated 6 million homeowners.
Davy Jun Huang, a U.S.-based economist and former columnist for Chinese state media outlet CNTV, told The Epoch Times that Hui’s life sentence answers the question of who committed crimes, but does not answer who should bear responsibility for Evergrande’s enormous debts and unfinished projects.
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“These are two completely different questions,” Huang said. “The harsher Hui Ka Yan is punished, visually it feels like the problem has been solved, but in reality, the houses will not automatically be completed because of this, and creditors’ money will not be recovered because Hui Ka Yan has been sentenced.”
The question of who ultimately absorbs Evergrande’s losses is likely to remain more consequential for ordinary Chinese than Hui’s punishment.
Who Will Pay?
Evergrande’s collapse has left losses spread among several groups, including homebuyers, suppliers, banks, investors, and other creditors.
Huang said the fines imposed on Evergrande and its property subsidiary would go to the Chinese regime rather than directly to homebuyers or toward completing unfinished properties. He argued that the losses from Evergrande had effectively been distributed throughout society among homebuyers, suppliers, and investors.
This has fueled debate over whether the regime should use the proceeds of fines and other revenues associated with the property sector to compensate victims.
Huang said such demands were reasonable from both legal and economic perspectives. He pointed to the U.S. government’s 2008 intervention in Fannie Mae and Freddie Mac as an example of the government assuming responsibility when a major part of the housing finance system was threatened.
China’s regime, he said, played multiple roles in the property boom, as the dominant supplier of land, regulator, and major beneficiary of property-related revenue, but did not assume the corresponding losses when the market collapsed.
“When real estate was rising, the government used land-sale revenues, land-transfer taxes, and layers of extraction to squeeze out the last penny,” Huang said. “When the real estate bubble burst, under the Chinese Communist Party’s (CCP) political model, the government would not bear any of the losses.”
The halted under-construction Evergrande Cultural Tourism City in Taicang, Suzhou city, in China’s eastern Jiangsu Province, on Sept. 17, 2021. Vivian Lin/AFP via Getty Images
Suppliers Face Steep Losses
The impact of Evergrande’s collapse extends well beyond unfinished apartment complexes.
Xu Zhen, a senior professional in China’s capital markets, told The Epoch Times that China’s local governments were among the biggest beneficiaries of Evergrande’s expansion. He estimated that local governments collected roughly 1.2 trillion to 1.7 trillion yuan ($180 billion to $250 billion) in land-sale revenues and taxes directly associated with Evergrande between 2016 and 2021.
That money had already entered regime coffers and would not be affected by Evergrande’s bankruptcy or Hui’s imprisonment, Xu said.
China’s central regime would also benefit from the penalties imposed in the case, he said, because the money would go into state finances rather than directly compensating victims.
Banks initially benefited from lending to Evergrande but later became creditors themselves. Some of their claims were eventually sold at steep discounts after the company’s collapse. Xu cited a claim held by China Minsheng Bank that was ultimately sold for roughly 13.5 percent of its original value.
Homebuyers have faced a different kind of loss—years of waiting while continuing to carry mortgages on homes they may not be able to occupy.
However, Xu identified suppliers as the group that suffered the most severe financial damage.
Under China’s bankruptcy repayment priority, homebuyers generally rank ahead of construction claims, secured bank creditors, and ordinary unsecured suppliers. Evergrande owed suppliers more than 1.06 trillion yuan, making that category the largest of the four major groups of creditors, according to Xu.
The debts affected thousands of small and medium-sized companies, many of which had limited bargaining power and few legal resources.
Some construction contractors and materials suppliers collapsed after failing to collect commercial bills issued by Evergrande. In the bankruptcy liquidation of Evergrande’s first subsidiary to enter bankruptcy proceedings, ordinary creditors received a recovery rate of 0.69 percent, Xu said.
Evergrande also raised roughly 92.1 billion yuan ($13.7 billion) through its wealth-management business using schemes promising principal protection and high returns. As of the latest disclosures cited in the Chinese reports, about 34 billion yuan ($5.06 billion) remained unpaid, affecting more than 100,000 investors.
Construction workers rent shared bicycles as they leave a building site for a new office tower in the Central Business District of Beijing on April 3, 2025. Kevin Frayer/Getty Images
A Boom Built on Political Ties
The collapse has also revived questions about how Evergrande grew so rapidly in the first place.
Taiwan-based Japanese journalist Akio Yaita, a prominent critic of the CCP, told The Epoch Times that the company’s downfall was not simply the result of excessive leverage and a bursting property bubble. He said it exposed deeper problems in China’s system of political and business relationships.
As long as entrepreneurs maintained strong political connections, Yaita said, access to land, regulatory approvals, and financing becomes much easier. Rising property prices then allowed companies to expand rapidly.
However, such a model was inherently vulnerable to changes in political power, he said.
“China’s system makes it difficult to produce people like Konosuke Matsushita, YK Pao, and Morris Chang, who build corporate culture and industrial foundations over decades, and it is also difficult to produce entrepreneurs like Elon Musk and Jensen Huang, who rely on technological innovation to change the global industrial landscape,” Yaita said.
Instead, he said, the system was more likely to produce entrepreneurs who rose rapidly through political connections and then fell just as quickly when those political relationships changed.
Huang described Evergrande’s rise as a form of mutually beneficial cooperation between business and the regime.
During the property boom, he said, developers helped local governments generate land revenue and economic growth, while banks expanded lending and met credit targets. The interests of developers, banks, and government officials were therefore aligned.
Huang said he visited Evergrande’s headquarters in 2018 to give a lecture on policy analysis and forecasting and warned Hui that the company should stop expanding after 2018. Hui and the company did not heed the warning, he said.
That does not absolve Evergrande or Hui of responsibility, Huang said.
However, the collapse illustrates a broader problem. According to Xu, private property developers can become highly dependent on a system in which land and access to capital are heavily controlled by the state.
“From an employee to a scapegoat is the fate of private real estate owners under the CCP’s monopoly over land and capital,” Xu said. “Hui Ka Yan is a typical example.”
“If you do well, the CCP lets you gain both fame and fortune; if you do badly, it makes you a prisoner,” he said.
Hui’s imprisonment therefore does not end the questions raised by Evergrande’s collapse. For the company’s former customers and creditors, the larger issue remains who will ultimately bear the cost and whether any of the money and homes lost in the collapse can be recovered.
Tang Bing and Luo Ya contributed to this report.
