In the US, the real estate behemoth Evergrande has requested bankruptcy protection as the Chinese real estate crisis worsens.
It will enable the deeply indebted corporation to safeguard its US assets while it negotiates a large-scale settlement with creditors.
In 2021, Evergrande stopped making payments on its large loans, shocking the world’s financial markets.
The decision was made as worries about the world’s second largest economy grow in response to issues in China’s real estate industry.
On Thursday, China Evergrande Group filed for Chapter 15 bankruptcy protection in a court in New York.
A foreign firm can protect its US assets under Chapter 15 while it seeks to restructure its debts.
A BBC request for comment received no immediate response from Evergrande.
According to its website, the group’s real estate division has more than 1,300 projects in more than 280 Chinese cities.
It also runs a football team and an electric vehicle manufacturer.
In an effort to renegotiate its agreements with creditors, Evergrande
after skipping payments on its debt.
It was the most indebted real estate developer in the world, with debts believed to be worth more than $300 billion (£235 billion).
Trading in its shares has been halted since last year.
Evergrande disclosed last month that it lost 581.9 billion yuan ($80 billion; £62.7 billion) during the previous two years.
Another significant Chinese real estate conglomerate, Country Garden, issued a loss estimate for the first half of the year that might reach $7.6 billion last week.
Some of the largest firms in China’s real estate industry are having trouble raising the funds necessary to finish projects.
According to economist Steven Cochrane of the economic research firm Moody’s Analytics, the solution to this problem is to finish incomplete projects because doing so will at least keep some money flowing.
The developer’s finances are further strained because many homes are pre-sold but if development stops, customers are unable to make their mortgage payments.
Beijing claimed earlier this month that the economy of China has entered a state of deflation as a result of the first decrease in consumer prices in more than two years in July.
Due to its weak growth, China is not seeing the increasing prices that have alarmed many other nations and forced central bankers to dramatically raise borrowing costs.
Last month, the nation’s imports and exports both experienced significant declines as weakening global demand jeopardized the chances of the world’s second-largest economy recovering.
According to official data, imports decreased 12.4% in July compared to the same month last year, while exports declined 14.5%.
In an effort to stimulate the economy, China’s central bank unexpectedly reduced key interest rates for the second time in three months earlier this week.