Beyond Evergrande_ China s property market faces a $5tn reckoning

China Evergrande Group_ the embattled property developer_ is the first high-profile real-estate company to run into serious trouble in Beijing s campaign to tame a roaring property market.

It might not be the last.

As China enters what many economists say is the final stage of one of the largest real-estate booms in history_ it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good_ according to economists at Nomura Holdings Inc.

That debt is nearly double what it was at the end of 2016 and is more than the entire economic output of Japan_ the world s third-largest economy_ last year.

Global markets are braced for a possible wave of defaults_ with warning signs flashing over the debt of about two-fifths of development companies that have borrowed from international bond investors.

Chinese leaders are getting serious about addressing the debt_ with a series of moves meant to curb excessive borrowing. But doing so without torpedoing the property market_ crippling more developers and derailing the country s economy is quickly turning into one of the biggest economic challenges Chinese leaders have faced in years_ and one that could reverberate globally if mismanaged.

Luxury developer Fantasia Holdings Group Co. failed to repay $206 million in dollar bonds that matured Oct. 4. In late September_ Evergrande_ which has more than $300 billion in obligations_ missed two interest-payment deadlines for bonds.