China debt risks loom over global financial system

HONG KONG — The slump in China’s real estate market has heightened the risk of defaults by developers that could leave Chinese banks with massive losses, with potential knock-on effects stretching beyond the country’s borders.

The worries surrounding developers like troubled China Evergrande Group and top player Country Garden Holdings have chilled housing sales. Real estate companies may fall into negative net worth if falling housing prices drag down the value of their unfinished properties too far.