Core Viewpoint - The company Huazhong City (01668.HK) has been ordered into liquidation by the High Court, marking it as the first state-owned developer to face such a fate amid the ongoing turmoil in the real estate sector in China [1][2]. Group 1: Company Background - Huazhong City, established in 2002 and listed in 2009, primarily operates as a developer and operator of integrated logistics and commodity trading centers, with significant projects in cities like Shenzhen, Nanning, and Xi'an [4][5]. - The company has faced severe financial difficulties since the real estate market downturn began in 2021, leading to the introduction of state-owned capital for support [4][5]. Group 2: Financial Struggles - As of the fiscal year 2023, Huazhong City reported a loss attributable to shareholders of HKD 4.32 billion, with interest-bearing liabilities totaling HKD 16.295 billion and cash reserves of only HKD 1.143 billion [6]. - The company attempted to restructure its debts, but out of five bonds, only one was granted an extension, while two bonds defaulted in February 2024, triggering the current liquidation process [6]. Group 3: Liquidation Process - The liquidation was initiated by Citigroup International concerning a USD 306 million bond due in April 2024, which had already defaulted [2][3]. - Despite efforts to negotiate with creditors and restructure debts, Huazhong City failed to present a comprehensive debt restructuring plan before the court's intervention [2][3]. Group 4: Market Implications - The case of Huazhong City reflects a broader trend in the Chinese real estate market, where many developers are facing similar pressures, particularly smaller firms with weak refinancing capabilities [3][7]. - The involvement of the court in the liquidation process indicates a shift towards more aggressive measures to address the ongoing liquidity crisis in the sector [3][7].