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China Evergrande, a behemoth property developer, filed for bankruptcy protection on Thursday more than two years after it defaulted on its debt.

The company’s meltdown in 2021 was followed by the defaults of smaller developers and signaled the start of a slow decay of China’s real estate sector that now threatens to inflict damage on the country’s broader economy. Another giant developer, Country Garden, is staring down a default of its own after missing payments to lenders and holding $200 billion in unpaid bills.

Evergrande’s bankruptcy petition, filed in the United States bankruptcy court in the Southern District of New York, comes as the company continues to try to settle staggering levels of debt. As of the end of last year, Evergrande, which along with its affiliated companies has assets in the United States, reported liabilities totaling $335 billion.

That Evergrande is still negotiating with its creditors is a sign of the deep structural problems and slow-moving crash facing China’s real estate market.

Long the prime avenue for millions of Chinese people to build wealth, the housing sector has in effect seized up because of a turn in government policy several years ago to cool the property market. China’s top leader, Xi Jinping, ordered that homes should be for living, not for speculation. Then, in 2020, the government cracked down on excessive borrowing, limiting the ability of real estate companies to raise money and prompting a series of defaults.

The policy change was a sharp comedown for an exuberant housing market that for decades ran parallel to China’s rise as a global economic power, but was marred by overbuilding and risky financial practices.

Home buyers frequently took out mortgages to purchase apartments before construction was completed, providing developers with a steady stream of revenue they used to operate and build more homes. As the market slowed, consumers were left with debt and no home to show for it.

Evergrande had presold 720,000 apartments that it had yet to complete at of the end of last year, according to Gavekal Dragonomics, a research firm.

Adding to the woes of the housing market, China’s overall economy, the world’s second largest, is struggling to recover after three years of harsh “zero Covid” measures that left companies wary of hiring, consumers reluctant to spend, stocks suffering and would-be homeowners wary of buying.

“China’s property sector has experienced an unprecedented correction,” analysts at Nomura wrote in a research note this week.

Country Garden, which has said it expects its losses in the first half of this year to climb as high as $7.6 billion, has yet to complete nearly one million apartments across hundreds of cities in China, by one estimate.

Commenters on Chinese social media sites this week reacted to news of Country Garden’s financial spiral with anger, some invoking the painful memory of Evergrande’s default two years ago.

Alexandra Stevenson and Daisuke Wakabayashi contributed reporting.

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