China’s biggest property developer Country Garden Holdings has reported a 96% drop in profits, blaming a “severe depression” in the country’s crisis-hit property market in which “only the fittest can survive”. The company, which is listed in Hong Kong, said preliminary net profit collapsed from 15bn yuan ($2bn) to 612m yuan ($88m) in the first six months of the year thanks to the housing market crisis that is slowly engulfing the Chinese economy. Country Garden, which boasts thousands of property projects and a footprint in nearly 300 municipalities, has seen its shares plunge more than 70% this year and the stock dropped another 2.3% on Tuesday to stand at HK$2.54. It had warned earlier that profits could fall up to 70% and the even bigger than expected drop came with a grim warning in a statement to the Hong Kong stock market. “In 2022, the property sector faced myriad challenges, including the market’s weakening expectations, sluggish demand and a fall in property prices,” the company said. “All these exert mounting pressure on all participants in the property market, which has slid rapidly into severe depression. The harsh business environment in which only the fittest can survive means even higher requirements for businesses’ competitive strength.” China’s property crisis began to rear its head nearly a year ago when the second biggest developer, Evergrande, said that it might not be able to meet repayments on the offshore, dollar-denominated part of its massive $300bn debt mountain. At the time, market watchers believed that companies such as Country Garden – which did not have such high borrowings – would not be tainted by the problems. But the debt contagion has spread from Evergrande throughout the enormous $60tr Chinese property market, bringing a 40% drop in sales, falling prices, and a mortgage strike by homeowners angered by the non-completion of homes for which they have paid upfront. The bleak outlook has been compounded by the zero-Covid lockdowns that have strangled economic activity all over China in the past 12 months, and Country Garden also blamed the recent extreme weather for upsetting profits. The company’s problems have also seen its majority shareholder – Yang Huiyan, daughter of the founder – lose half her $24bn fortune. However, the company still managed to strike an optimistic note and said there was hope for an upturn in fortunes because urbanisation of the population was still progressing. “China’s economy has proven resilient and its strong fundamentals for long-term development remain intact,” ti said. “The country’s new type of urbanization still has a long way to go and the desire for a good life will always remain dear to people’s hearts. The real estate industry will always exist.” “We will persevere and remain hopeful despite adversity. Country Garden keeps its feet on the ground as it works hard to get through a harsh winter and anticipates the arrival of spring.”