PHOTO: China’s property boom has seen high-rise apartments sprout up across the country.

It’s one of Hemingway’s best lines, from The Sun Also Rises.

“How did you go broke?” Bill asked.

“Two ways,” said Mike. “Gradually and then suddenly.”

It is a passage to which Xu Jiayin, founder of China Evergrande, China’s biggest property group and the world’s 122nd largest company by sales, can relate.

For most of this year, his firm has been floundering, fighting off hordes of angry creditors, defending court actions and desperately trying to secure enough finance to survive. Now the situation has taken a sudden turn for the worse.

At its peak, three years ago, the Hong Kong-listed China Evergrande was the world’s most valuable real estate group. It’s now better known as the world’s most indebted property developer, owing more than $US300 billion ($403 billion).

Once a symbol of glittering success in the most exciting property market on the planet, China Evergrande is now tanking, and dragging many of its competitors with it, as global investors and creditors desperately attempt to parachute out of the troubled Chinese property sector.

Players for Jiangsu Suning and Guangzhou Evergrande walk out during a Chinese Super League match in Nanjing, China.
Evergrande is the major sponsor of Chinese Super League team Guangzhou FC.(ABC News: Bill Birtles)

The owner of football club Guangzhou FC, the company two years ago boasted of taking on Elon Musk’s Tesla, establishing an electric vehicle subsidiary with three production hubs in southern China. By that stage, Mr Xu was China’s third-richest person, with an estimated wealth of $US30 billion ($40.3 billion).

Last week, the firm, with projects underway in 22 cities, warned that it may default on debt repayments if its efforts to refinance and sell assets fall short, an announcement that rattled global debt markets.

Contractors are lining up for payment, and creditors are fleeing, willing to accept less than 30 cents in the dollar from anyone game enough to buy Evergrande debt. Meanwhile, tens of thousands of hopeful apartment owners are fretting that a collapse may see their deposits evaporate.

The only way the group can lift cash flow is to sell off its vast portfolio of apartments at heavy discounts. That is threatening to undermine prices across the country and potentially cause the collapse of rivals as the entire industry comes under pressure.

Either way, a crisis of confidence among buyers seems almost certain.

As an industry, Chinese property development is a hungry consumer of natural resources, particularly iron ore, the price of which has shed almost 40 per cent since May.

For years, the country’s leaders turned a blind eye to the industry’s excesses because it was one of the main vehicles for stimulating economic growth.

But with Beijing taking a back seat as the firm unravels, its demise looks set to send shock waves through the steel industry, adding further pressure to iron ore prices.