S
hares in China Evergrande were removed from the Hong Kong Stock Exchange on Monday, marking a significant step in the company's retreat. The move comes as creditors continue to grapple with debts that exceeded $340 billion. Once China's second-largest developer, Evergrande faced trouble after Chinese regulators cracked down on excessive borrowing by developers several years ago.

    This crackdown triggered a downturn in the property market, which has persisted and weighed heavily on China's economy. The delisting of Evergrande's shares was expected, as they had been suspended since January 2024 following a court-ordered liquidation due to the company's failure to provide a viable debt restructuring plan.

    The Hong Kong Exchange rules stipulate that a company's share listing can be canceled if trading in its securities is suspended for 18 straight months. Evergrande's downfall was a key contributor to China's property crisis, which began when global rating agencies cut the Chinese government's credit rating in 2017 due to warnings of excessive borrowing.

    In 2020, the ruling communist party imposed controls known as "three red lines" to curb real estate debt, prohibiting heavily indebted developers like Evergrande from further borrowing. Fears of an Evergrande default in 2021 sent shockwaves through global markets, but were later eased by assurances from the Chinese central bank that credit markets would remain stable.

    Evergrande was one of many developers that failed to repay creditors, leading to suspended construction and a ripple effect on the economy. The slowdown in home purchases and building hit demand for construction materials, appliances, and vehicles, exacerbating disruptions caused by the COVID-19 pandemic. With most Chinese families' wealth tied up in property, the anemic housing market has been a major factor crimping consumer spending.