The conviction of Evergrande’s chief executive in China is also symbolic of a disaster

The photos broadcast by Chinese state television showed Hui Ka Yan, founder of China Evergrande Group, in court in Shenzhen, but he looked like a different person. Arrested in September 2023 and tried last April, when he pleaded guilty before the judges, he appeared in court with white hair and a dejected air, unrecognisable from the entrepreneur who, for a time in 2017, was the richest man in Asia. The trial against him – which concluded with a life sentence in one of the largest financial crime trials in the People’s Republic’s recent history – is a symbol for the Chinese Communist Party, and he must embody this symbol even physically. For China, Hui’s conviction symbolically brings to a close an economic cycle that lasted almost thirty years – one in which China’s growth was driven by the property sector – and effectively marks the transition to a different model, characterised by industrial overcapacity and dependence on exports.

According to the judges, Evergrande and Hui are alleged to have gained control of financial institutions through corruption, before channelling credit and insurance funds into the group, whilst financial statements were manipulated to continue attracting public deposits and capital. But growth fuelled by hidden debt, underpinned by the expectation of ever-rising property prices, is more or less the same logic that sustained the entire sector for two decades, before Beijing introduced regulations on excessive debt among property developers in 2020. The Chinese leadership has simply shifted credit and industrial policy towards advanced manufacturing, EVs, batteries, solar panels and semiconductors. But it is the same logic of over-investment shifted to other sectors, whilst domestic demand remains weak and excess production capacity finds an outlet exclusively in exports, with a record trade surplus in 2025. There will be other Hui Ka Yans in the Chinese system.