Beijing's strategic silence: The rhetoric of power in times of crisis

### 20 million shattered dreams: The true drama behind the Evergrande collapse ### China's ticking time bomb: More than just Evergrande – the true extent of the crisis ### Beijing detonated the bomb itself: How a political decision brought Evergrande down ### Evergrande at the end: Why Beijing's silence is louder than any stock market crash ###

What the Evergrande case teaches us about China's true strategy: Silence is power

The demise of Evergrande, sealed by its delisting from the Hong Kong Stock Exchange, is far more than the collapse of a real estate giant. It is a sign of a systemic crisis shaking China's economy to its core – a crisis whose true extent is concealed by a strategic maneuver by Beijing: deafening silence. While successes in future industries such as artificial intelligence and electric mobility are celebrated with great pomp, the Communist Party is shrouding the decline of its once most important economic engine in a cloak of secrecy. But behind this deliberately staged silence lies a drama of historic proportions: debts of over $300 billion at Evergrande alone, more than 50 insolvent developers, and an estimated 20 million apartments that were sold but never completed. This analysis reveals why Beijing's silence is not a sign of helplessness but a calculated power strategy, how this tactic stands in sharp contrast to the loud propaganda surrounding success stories, and why this asymmetric communication undermines trust in China's economic model in the long term.

What does Evergrande's delisting tell us about China's communications strategy?

Evergrande's delisting from the Hong Kong Stock Exchange on Monday not only marks the end of a corporation, but also reveals a fundamental pattern in China's political communications. Beijing's silence on this dramatic case is anything but accidental—it is a deliberately chosen strategy typical of the Chinese leadership's handling of uncomfortable truths. While success stories are trumpeted with pomp, crises are shrouded in a vacuum of silence.

This strategy of selective silence is deeply rooted in the political DNA of the Chinese Communist Party. It follows the principle that information is only publicly disclosed if it serves the party's narrative. Evergrande's collapse does not fit into this narrative of continuous rise and economic superiority, which is why it has been banished from public discussion.

How dramatic is the Evergrande case really?

Evergrande's decline is unprecedented in its magnitude. Just a few years ago, the company was considered a prime example of China's economic miracle. With a market capitalization of over $50 billion at its peak, Evergrande was once China's second-largest real estate developer. The group managed approximately 1,300 projects in over 280 cities and even owned the country's most successful soccer club, Guangzhou FC.

Today, only rubble remains of this empire. With debts of at least $300 billion, Evergrande is considered the most indebted real estate developer in the world. Its shares have lost over 99 percent of their value, and millions of Chinese families are still waiting for their prepaid but never-delivered apartments. Liquidation by a Hong Kong court in January 2024 finally sealed the fate of the once-mighty corporation.

What role did China's "Three Red Lines" policy play in this collapse?

Evergrande's downfall did not begin by chance, but was the direct result of a political decision. In 2020, Beijing introduced the so-called "Three Red Lines" policy, aimed at limiting excessive leverage among real estate developers. This policy restricted borrowing based on three criteria: the debt-to-cash ratio, the debt-to-equity ratio, and the debt-to-asset ratio.

Evergrande crossed all three red lines simultaneously, leading to an immediate liquidity crisis. The irony is that the government itself laid the groundwork for the collapse it now so vehemently seeks to conceal. The "Three Red Lines" policy was a clear signal that Beijing was willing to abandon even large corporations in order to achieve its economic goals.

How widespread is the crisis in the Chinese real estate sector?

Evergrande is by no means an isolated case, but just the tip of the iceberg. Since 2021, more than 50 real estate developers have defaulted on their payments. Country Garden, once another industry giant, reported losses of $27.5 billion for 2023—the second-largest loss ever recorded by a Chinese company. Other prominent developers such as Kaisa Group, Fantasia Holdings, Sunac, and Sinic Holdings are also on the verge of collapse.

The scale of the crisis is evident in the sheer number of affected projects. It's estimated that 20 million housing units have been sold but not yet built. These unfinished projects have become symbols of shattered dreams and represent a huge strain on consumer confidence.

Why is the Chinese government silent about this crisis?

Beijing's silence on the real estate crisis is strategically motivated and follows established patterns of crisis communication. The Chinese government systematically pursues a policy of silence, waiting it out, and distraction when it comes to uncomfortable truths. This strategy is based on several considerations.

First, the housing crisis doesn't fit the desired narrative of continued economic success. While successes in promising sectors such as artificial intelligence, electric vehicles, and renewable energies are widely communicated, structural problems are deliberately kept out of public discussion. Second, the leadership fears that an open discussion about the extent of the crisis could further undermine public confidence and lead to social unrest.

How does China's propaganda machine work when it comes to success stories?

While there is silence during crises, China's propaganda apparatus unleashes its full power when it comes to success stories. The Communist Party's Central Propaganda Department systematically coordinates positive messages across various media channels. Modern digital technologies are skillfully used to reach younger target groups.

One example of this strategy is the use of artificial intelligence to create propaganda content. Companies like GoLaxy are developing sophisticated systems for the Chinese government that are capable of creating tailored messages and distributing them to specific audiences. This technology makes it possible to amplify positive narratives about China's progress in areas such as technology, infrastructure, and economic development.

What are the economic impacts of the housing crisis?

The real estate crisis has devastating effects on the entire Chinese economy. The real estate sector accounts for approximately one-quarter to one-third of China's economic output and has been one of the most important engines of growth for decades. Its collapse has triggered a chain reaction that extends far beyond the industry.

House prices continue to fall – in June 2025, prices in 70 major cities fell by 3.2 percent year-on-year. Sales are plummeting, projects are stalling, and local governments are losing their main source of income from land sales. Since most Chinese families have invested their wealth in real estate, the price decline is leading to a decline in consumer confidence and spending.

How is the government trying to manage the crisis?

Despite the public silence, the Chinese government is working behind the scenes to limit the worst effects of the crisis. The measures include a variety of instruments, from easing lending restrictions to direct government intervention.

In January 2024, China introduced a "whitelist" system to facilitate access to financing for selected real estate projects. By October 2024, banks had placed over 5,000 projects on this list and approved loans totaling $196 billion. In addition, a 300 billion yuan program was launched to help state-owned enterprises buy unsold apartments.

Why have these rescue measures so far been inadequate?

The rescue measures so far seem like a drop in the ocean because they fail to address the fundamental problem. Paradoxically, the "whitelist" system favors precisely those projects and companies that need the least help. Projects with unresolved legal disputes or financially troubled developers are systematically excluded.

Many private developers attempt to circumvent these barriers by transferring their projects to local financing vehicles. However, these quasi-governmental entities are themselves heavily indebted and often use the funds they receive to cover their own liabilities rather than to complete projects. This has further diluted the intended impact of the policy.

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How long will the sector's recovery take?

Forecasts for a recovery in China's real estate sector are bleak. Optimistic estimates predict that prices could stabilize by the end of 2025 or early 2026. More realistic estimates suggest a full recovery of the sector will take three to ten years.

Goldman Sachs estimates that without further government intervention, real estate prices could fall another 20 to 25 percent, bringing them to about half their peak. Bank of America forecasts a decline in new home sales of 8 to 10 percent and a decline in new construction projects of 15 to 20 percent for 2025.

What structural problems underlie the crisis?

The real estate crisis is not merely cyclical, but reflects fundamental structural problems in the Chinese economy. Demographic changes play a central role. With an aging population and declining birth rates, the natural demand for housing is declining.

At the same time, China's rapid urbanization has led to a real estate oversupply. Experts estimate that there are approximately 90 million vacant permanent structures on the mainland—equivalent to one building for every two residents. This massive oversupply cannot be offset by domestic demand in the foreseeable future.

How does the crisis affect China's political stability?

The housing crisis poses a serious challenge to the political legitimacy of the Communist Party. For decades, the party's legitimacy was based on two pillars: economic performance and nationalism. With the slowdown in economic growth, the nationalist card is becoming increasingly important for maintaining popular support.

But the housing crisis is undermining both sources of legitimacy simultaneously. Economic performance is weakening, and the government's inability to stabilize one of the most important economic sectors is calling into question its competence. At the same time, the loss of wealth for many families is leading to growing discontent, which is difficult to disguise even with nationalist appeals.

Why does hiding the crisis work?

The systematic concealment of the housing crisis works in China for several reasons. First, the Communist Party, through its Central Propaganda Department, controls all major media outlets. Journalists and media organizations are forced to avoid critical reporting through a system of surveillance, censorship, and self-censorship.

Second, over decades, the Chinese population has become accustomed to certain issues not being discussed publicly. The strategy of "non-comment" and "strategic ambiguity" is deeply rooted in Chinese political culture. People have learned to read between the lines and adapt to what is officially communicated.

What role does the international dimension of the crisis play?

The international dimension of the Evergrande crisis highlights the limits of China's strategy of silence. While domestic reporting can be controlled, international media and markets cannot. Evergrande's delisting in Hong Kong—an international financial center—could not be concealed.

International creditors who have invested billions of dollars in Chinese real estate developers cannot simply be silenced. Their losses and their criticism of the lack of transparency are damaging China's reputation as a reliable partner for foreign investors. This demonstrates the limits of the strategy of silence when it comes to globally interconnected economic sectors.

How does silence during crises contrast with communication about successes?

The contrast between China's communication about crises and successes could hardly be greater. While the real estate crisis is hushed up, successes in promising technologies are loudly celebrated. Advances in artificial intelligence, electric vehicles, and space travel are communicated through every available channel.

This selective communication strategy follows the principle of disseminating only news that conforms to the desired narrative. Success stories are often exaggerated, while problems are systematically ignored. This asymmetry in information policy is characteristic of authoritarian systems that maintain their legitimacy by controlling public perception.

What impact does this strategy have on trust?

The strategy of concealing crises while boasting about successes paradoxically undermines public trust. While the government hopes to avoid panic by suppressing negative news, the silence often leads to even greater uncertainty. People develop a sense of when information is being withheld, which leads to speculation and rumors.

In the case of the real estate crisis, the extent of the problems is obvious to the affected families and investors, despite censorship. The government's silence is therefore interpreted not as reassurance, but as a sign of helplessness or a lack of transparency. This damages trust in the government's ability to deal with crises.

How does demographic change affect the future of the real estate sector?

Demographic trends in China are significantly exacerbating the structural problems of the real estate sector. With an urbanization rate already reaching 70 percent, urban growth is slowing. At the same time, the past one-child policy and cultural changes are leading to declining birth rates and an aging population.

These demographic changes mean that the long-term demand for new housing will structurally decline. Experts estimate that it could take 30 to 40 years to resolve the current oversupply of real estate. This makes the housing crisis a long-term problem that cannot be solved by short-term stimulus measures.

What alternatives are there to the strategy of silence?

Theoretically, the Chinese government could have also chosen a more transparent communication strategy. An open discussion about the challenges in the real estate sector could have strengthened trust and created realistic expectations. Many Western governments pursue a strategy of controlled openness in times of crisis, acknowledging problems while simultaneously pointing out possible solutions.

But such a strategy contradicts the Communist Party's political DNA. The system is designed to project infallibility and suppress any form of criticism. Open discussion of systemic problems could be interpreted as weakness and call into question the party's authority. Therefore, the strategy of silence remains the preferred option, despite its obvious drawbacks.

How does the crisis affect other economic sectors?

The real estate crisis has repercussions far beyond the sector. The construction industry, traditionally a key driver of China's growth, has been shrinking for years. Demand for building materials, household appliances, and even vehicles has plummeted. Local governments, which rely heavily on land sales, are under enormous financial pressure and have had to cut spending.

The crisis is also affecting the banking system, as many loans to real estate developers are at risk of becoming non-performing. Although Chinese banks have remained resilient so far, the risk of systemic problems increases with the duration and depth of the crisis. This partly explains why the government, despite its strategy of silence, is actively working behind the scenes on solutions.

How do the financial markets react to the silence?

Financial markets are increasingly skeptical of China's strategy of silence. Evergrande's delisting is merely a symbol of the growing uncertainty about the true state of the Chinese economy. International investors are complaining about the lack of transparency and are partially withdrawing from the Chinese market.

The market reaction demonstrates the limits of the strategy of silence. While domestic media can be controlled, international investors are not so easily fooled. They evaluate investments based on available information, and a lack of transparency is priced in as a risk factor. This leads to higher capital costs for Chinese companies and complicates crisis management.

What are the long-term consequences of the strategy of silence?

The long-term consequences of China's strategy of silence extend beyond the current real estate crisis. Systematically concealing problems while simultaneously boasting about successes creates a distorted picture of economic reality. This can lead to misallocation of resources because political decisions are based on incomplete or distorted information.

At the international level, China's strategy of silence undermines its credibility as a responsible global actor. Systematic concealment of crises raises doubts about the reliability of Chinese information in general. This could harm China's ambitions to play a greater role in global governance.

Why silence is unsustainable in the long term

Beijing's strategy of remaining silent during crises and boasting about successes may work in the short term, but it is unsustainable in the long term. The real estate crisis demonstrates the limits of this communication strategy. While domestic reporting can be controlled, the effects of a systemic crisis cannot be censored.

The delisting of Evergrande therefore marks not only the end of a corporation, but also a turning point in the perception of China's economic model. The crisis persists, no matter how loud the silence. What is tragic is not only the economic damage, but also the missed opportunity to build trust through transparency and open communication. But in a system based on the control of information, this opportunity remains unused. Evergrande may have disappeared from the stock exchange – but the structural problems that led to its downfall remain, and silence will not make them disappear.

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