A Shenzhen court on Thursday found Hui guilty of eight offences, including fundraising fraud, misuse of corporate funds, illegally taking public deposits, loan-related offences, securities fraud and bribery. His personal assets were confiscated. Evergrande and its main mainland property subsidiary, Hengda Real Estate, were fined a combined 15.82 billion yuan (USD 2.35 billion).

The verdict marks the end of a significant chapter in the rise and fall of a company that epitomised China’s debt-fuelled property boom and the risks associated with a growth model reliant on ever-increasing borrowing.

Hui, 67, pleaded guilty in April during a two-day trial. The charges related to conduct between 2016 and 2021, when the company was rapidly expanding and increasingly dependent on debt and advance payments from homebuyers. The court said Hui and Evergrande had inflated assets, concealed liabilities and engaged in large-scale financial fraud.

Evergrande was founded in 1996 and grew from a property developer in Shenzhen into a sprawling conglomerate with interests ranging from real estate and electric vehicles to football and consumer businesses. At its peak, it had annual property sales of about USD 100 billion, and Hui’s personal fortune reached roughly USD 45.3 billion in 2017, according to Reuters.

The company’s spectacular expansion Borrowing fuelled the company’s spectacular expansion. by borrowing.

Evergrande raised money from banks, bond investors and homebuyers and used the proceeds to finance a constant pipeline of new developments. The model thrived as property prices soared, credit flowed freely, and buyers consistently paid deposits for unfinished homes.

It became increasingly fragile when China’s authorities began tightening controls on developers’ leverage.

The government’s “three red lines” policy, introduced in 2020, sought to curb excessive borrowing by imposing limits on developers’ debt and liquidity. The change exposed weaknesses across the property industry, with Evergrande among the companies most heavily affected.

By 2021, Evergrande had defaulted on its debts. Its liabilities exceeded USD 300 billion, making it one of the largest corporate debt failures in history. The collapse triggered a wider property crisis, leaving unfinished homes, angry homebuyers and losses for suppliers, banks and investors.

The consequences extended well beyond Evergrande.

China’s property industry had been a critical pillar of economic growth, accounting for a substantial share of economic activity through construction, materials, household wealth and related services. The sector’s prolonged downturn has weighed on consumer confidence, local-government finances and investment.

The legal proceedings against Hui therefore carry significance beyond the fate of one businessman.

Chinese authorities have increasingly sought to signal that corporate executives cannot treat aggressive borrowing and financial manipulation as simply another form of entrepreneurial risk.

The court said the fraud caused “extremely severe” social harm, while prosecutors argued that the scale of the misconduct warranted a particularly severe punishment. More than 50 other people connected with Evergrande were also sentenced, with prison terms ranging from less than two years to 18 years.

The case also highlights the distinction between Evergrande’s financial collapse and its continuing liquidation.

A criminal conviction does not resolve the enormous claims against the company. In January 2024, a Hong Kong court ordered Evergrande into liquidation after the company failed to restructure its offshore debt. The process of recovering assets and distributing proceeds to creditors remains complicated and protracted.

Hui’s fall is particularly striking because of how closely his career tracked China’s economic transformation.

He rose from rural Henan, trained as a steel technician and moved into property during the country’s extraordinary urbanisation boom. Evergrande’s low-cost housing strategy helped make him a billionaire and turned the company into a national powerhouse.

At its height, however, the business had become too dependent on leverage.

The company’s collapse demonstrated how quickly an asset-price boom can turn into a balance-sheet crisis when credit conditions change.

For China’s property market, the verdict is unlikely to provide an immediate solution. Analysts said the trial itself was not expected to change market conditions materially, while the sector remains under pressure from weak demand, falling property values and unfinished developments.

But the symbolism is powerful. Hui built an empire on the assumption that China’s property boom could continue indefinitely. His life sentence represents the state’s answer to that era.

The message is that the age of growth at almost any cost, financed by increasingly aggressive borrowing, is over.

For investors, the more important question is whether China can replace that old property-driven model with one based on more sustainable sources of growth.

Evergrande’s collapse may have ended one property empire. The economic consequences of the model that created it are still unfolding.

The post Evergrande founder jailed for life as China draws a line under its property bust appeared first on International Finance.