A Study of Debt Problems in the Chinese Real Estate Industry

This paper will focus on real estate industry in China, uses Evergrande group as a case to compare with another Chinese real estate company Vanke and a real estate company of United State which is AvalonBay Communities, Inc. This paper will introduce the background of real estate industry in China, and base on the case which is bankruptcy of Evergrande Group to throughout the causes find out the issues of real estate in China, in causes is discuss of three factors: Industry characteristics, financing channels, loan evaluation, analysing what make Evergrande can owe a massive $2.4 trillion in debt, and analysing the United States real estate industry not usually having such high leverage. Essay will tell the strategy of real estate companies in China usually do. The strategy led to Evergrande group bankruptcy and compare with Vanke uses what strategy avoid debt crisis. Finally, conclude the chaos of real estate industry in China reflected by Evergrande group, recognise the issues of Evergrande group and prevent the significant consequence occur again.