China Vanke, a state-backed developer, narrowly avoided defaulting on a 2 billion yuan bond last week amid the sluggish recovery in China’s property market. They also sought to delay repayment of another 3.7 billion yuan in debt. The property market continues to struggle despite government efforts to revive it.

Although Vanke’s bondholders approved extensions for debt repayments, the risk of default remains. The company’s revenue fell 27% in the latest quarter, and several onshore bonds were suspended from trading after prices dropped. The developer owes over $50 billion, less than China Evergrande’s $300 billion debt.

China’s property sector remains in a slump, with home prices down 20% from their peak in 2021. New home sales fell 11.2% in the first 11 months of 2025, and property investments dropped nearly 16% year-on-year. The market decline has led to layoffs, impacting consumer confidence and spending.

Vanke’s financial troubles could further weigh on China’s real estate market outlook. Economists predict home prices may not rebound until 2027 due to excess supply. State support for Vanke may not be enough to prevent default, with concerns about the impact on the wider real estate sector.

S&P Global downgraded Vanke to “selective default,” and Fitch Ratings to “restricted default.” Vanke still faces significant debt repayments in 2026, with over 9.4 billion yuan of bonds maturing in the next six months. A default by Vanke could have broader implications for the real estate industry.

Read more at Yahoo Finance: China Vanke’s near-default exposes fragility of the faltering recovery in the property industry