Country Garden funded its scale entirely with debt and presale cash — then both dried up

Country Garden grew into China's largest private developer by sales through a build-and-sell cycle it called the '456' model: about four months from buying land to launching a project, five months to collect buyer payments, six to recover the full cost. That speed pushed it into hundreds of lower-tier cities other developers avoided, funded by two things never guaranteed to flow together — cheap offshore and onshore debt to buy the next parcel of land, and presale deposits from buyers of apartments not yet built. Equity funded almost none of it.

The structure worked as long as sales kept rising and refinancing stayed open, because each new project's presale income served debt taken on for the last one, not the developer's own retained earnings. When Chinese property demand slowed and buyers grew wary of deposits on unfinished housing, that chain broke at both ends: presale collections fell and lenders stopped rolling over maturing bonds. Country Garden missed dollar-bond coupons in August 2023 and on 10 October 2023 failed to pay roughly $15 million, triggering cross-defaults across close to $11 billion in offshore bonds.

By the end of 2023 the company reported total assets of about $252.9 billion against equity of only about $29.5 billion, and a net loss of 201 billion yuan (about $28.5 billion), driven largely by 82.4 billion yuan in impairments on unsold and under-construction properties.

A creditor petitioned Hong Kong's High Court to wind up Country Garden in 2024; its shares were suspended for nine months while it prepared delayed statements, resuming in January 2025 near record lows. It then spent nearly two years negotiating an offshore restructuring covering roughly $14–18 billion of bonds and loans, winning bondholders holding over 75% of the debt by value and banks holding roughly half of syndicated loans, partly via loan-to-equity conversions. The court dismissed the winding-up petition on 16 February 2026, after the restructuring took effect.