Another sign of economic distress in the real estate sector was apparent last week as Evergrande, a China-based property development conglomerate, filed for bankruptcy in the United States. 

The massive company's Chapter 15 filing, the type of bankruptcy offered to foreign companies, sent shockwaves through the industry. Breitbart reported that the company has been under "intense pressure" since it defaulted on bonds in 2021.

The real estate sector in China has become not only one of the most coveted investment opportunities in a country with limited investment options, but it also became a cultural and status symbol.

It was noted that real estate investment makes up an estimated "30 percent of China’s gross domestic product."

Bad news

Chinese citizens with excess income used real estate investments as "precautionary," safe investment opportunities.

Breitbart noted:

Evergrande filed for Chapter 15 bankruptcy in Manhattan. Chapter 15 makes bankruptcy protection under U.S. law available to foreign companies. Much of Evergrande’s corporate debt was held by U.S. and European institutional investors.

China's real-estate sector played an oversized role in the country's overall economy.

Its ongoing collapse is doing major damage. | @DominicJPino https://t.co/BVtCsnnbVp

— National Review (@NRO) August 19, 2023

Given the influence that the company had on the global market, and especially in the U.S., which held a significant portion of the company's debt, many are worried about the impact of the bankruptcy on an already-weak global economy.

China's economy has a fast and critical effect on the U.S. economy, and the deterioration of the communist country's economy has sent U.S. stocks lower and bond yields higher.

Breitbart added, "Official data this week showed growth in consumer spending, industrial output, and investment declining in China."

Social media reacts

Social media reacted quickly to the news of the bankruptcy, with some users expressing concerns about how the U.S. market will react on Monday morning when it opens.

Is China going down?

Evergrande hits the bankruptcy vault
Country Garden, at risk of default
Is China going down
Into recession town?
Will it soon suck on poverty's salt?

— John Leahy (@johnleahy66) August 18, 2023

"Because they swept it under the rug. They should have dealt with it last year. Their failure will be systemic to the markets. Unbelievable," an X user wrote.

Only time will tell how significant the bankruptcy's impact will be on the U.S. and other major global markets, but it's not looking good.