China’s private homebuilders may find it challenging to maintain their anonymity for much longer.

Evergrande, the country’s most indebted developer, has acknowledged the possibility of a legal default. However, officials are under pressure to keep the sector from imploding without bending their hard line on debt levels, with $10 billion in property debts due to mature in January alone.

Evergrande isn’t the first private conglomerate to collapse and won’t be the last. The state has already restructured and re-nationalized Anbang and HNA.

In January, HNA, China’s most ambitious private conglomerate, became nationalized. Chen Feng, the company’s founder, and chairman was formally charged with criminal offenses.

Anbang Insurance, China’s financial dark horse, bought Manhattan’s iconic Waldorf Astoria for a record $1.95 billion in 2015, transforming it into a Chinese-owned hotel. However, in a complete state takeover last year, China’s second-largest insurer disappeared into history. Its name was also lost.

Wanda Group, China’s most well-known global brand, has sold practically all of its valued international holdings, including AMC Cinemas.

Private enterprises like Kaisa and Sunac—the second and third largest dollar bond issuers after Evergrande—are struggling to finish pre-sold projects and pay suppliers as they strive to save cash.

As money flows to state-owned developers, they will be the first to offer assistance, bringing another once-vibrant section of China’s private economy under stringent Chinese Communist Party (CCP) control.

On Friday evening, Premier Li Keqiang flagged an upcoming bank reserve requirement ratio cut while the provincial authorities in Guangdong sent a workgroup to oversee Evergrande’s “risk management.”

The policy relaxation has been disappointing. According to central bank officials, banks should not tighten credit to developers too much. There is evidence that some are being allowed to issue onshore bonds and asset-backed securities. However, state-controlled developers such as Poly Developments and China Merchants Shekou have reaped the benefits, Reuters reported.

According to one property executive who spoke to Breakingviews, specific lenders advised him that they had received advice to avoid private real estate firms.

Evergrande is an example of the kind of crony capitalism that Mr. Xi is trying to eradicate. As a result, the corporation now faces three possible outcomes, according to the National News.

The first is that Evergrande goes through a ruthless asset reduction and business acceleration procedure to survive the current liquidity crisis.

The second scenario would see the corporation suffer a succession of large-scale credit defaults, prompting a state takeover. Then, like HNA’s Mr. Chen, Founder Hui Ka Yan might face criminal prosecution.

Third, if there are no safeguards, Evergrande’s collapse would generate systemic financial shocks in China, spreading to global bond markets. That scenario could result in a more significant real estate supply chain crisis in China and panic selling among Chinese property purchasers.

Even if Evergrande had not reached a debt inflection point, the company would have been subjected to the CCP’s present drive to dominate vital sectors of the economy.

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