Concrete as Currency
How China Vanke Built a Financial Empire on a Foundation of Debt
The Auction
In the sweltering heat of a Shenzhen auction hall in 1988, the air was thick with cigarette smoke and skepticism.
The item on the block was a plot of land nicknamed “Vuitton Villa.”
Shenzhen was still young then, a boomtown trying to figure out what it wanted to be.
Most businessmen in the room sat with their arms crossed, sweat staining their shirts, unwilling to bet on a future that didn’t exist yet.
The price for the land was climbing, but the confidence in the room was falling.
Then, a man named Wang Shi raised his paddle.
He bid a price so high that the room went silent. People whispered that he was reckless, perhaps even crazy.
Why would anyone pay a fortune for dirt in a city that was still half fishing village?
They didn’t know it yet, but that single, gutsy bid was the spark that ignited an empire.
It was the “Call to Adventure.”
It was the moment Wang Shi’s company, Vanke, transformed from a simple trading outfit selling corn and office equipment into the engine that would build modern China.
Wang Shi wasn’t just buying land.
He was buying a ticket to the greatest economic show on earth.
He saw that millions of people were moving from the countryside to the cities, and every single one of them needed a place to sleep.
For the next thirty years, Vanke didn’t just participate in the Chinese real estate market; it defined it.
Wang Shi didn’t only climb to the top of China’s property market, he also climbed the world’s highest peaks including Mr. Everest.
Climbing these two different types of mountains came with their own unique challenges. But they share something important in common, the climb is only half the journey.
The descent is where the danger lies.
And today, after decades of climbing toward the sun, Vanke is finding out that the air at the top is very, very thin.
The Weapon: 5-9-8-6
Every hero needs a weapon.
King Arthur had Excalibur.
Thor had his hammer.
China Vanke had a sequence of numbers: 5-9-8-6.
This wasn’t a secret code for a safe. It was a formula for speed.
In the world of real estate, time is money. If you borrow money to buy land, you have to pay interest on that debt every single day.
The longer it takes you to build the house and sell it, the more money you lose to the bank. So, Vanke invented a system to move faster than anyone else.
5: Start building within five months of buying the land.
9: Start selling the apartments to customers by month nine.
8: Sell 80% of the units in the first month they are available.
6: Ensure at least 60% of a project’s units are standard residential units
This code was Vanke’s superpower. It allowed them to churn out homes at a speed the world had never seen. They prioritized speed and efficiency over building flashy, unique palaces. They built practical homes for the rising middle class: the teachers, the factory managers, the accountants.
They built the backdrop for the Chinese Dream.
But this system relied on a specific cultural reality. In the United States, people invest in the stock market or 401(k)s. In China, the stock market was seen as a casino, and banks paid almost zero interest.
There was only one thing people trusted to hold their wealth: Concrete.
Concrete became currency. It wasn’t just about having a place to live; it was about survival.
Families would pool their life savings to buy a second, third, or fourth apartment, often in cities they had never visited and never intended to live in.
They didn’t care if the apartment was empty; they cared that it was a “safe asset” that would always go up in value.
Vanke knew this.
They weren’t just building homes; they were creating the only asset people trusted. And for a long time, business was good.
The Dragon at the Gate
In every Hero’s Journey, the hero faces a test.
They have to fight a monster to prove they are worthy.
For Vanke, that monster arrived in 2015, and it came from the shadows.
Vanke had a strange structure. Even though Wang Shi was the founder, he didn’t own the company. The shares were spread out among thousands of small investors. This left the castle unguarded.
A quiet, aggressive financial group called Baoneng, led by a man named Yao Zhenhua, saw this weakness and began secretly buying up Vanke shares. By the time Wang Shi realized what was happening, Baoneng owned 24% of his company.
Wang Shi was furious. He called them “barbarians.” He viewed Vanke as a company with a soul, a company that cared about quality. He saw Baoneng as a group of raiders who only cared about stripping the company for cash.
Vanke tried to find a “White Knight”, someone who could fend off the corporate raiders. They found one in the Shenzhen Metro Group, the state-owned company that runs the subway trains in Vanke’s hometown. But then, a second dragon appeared: China Evergrande, another massive developer run by a flashy billionaire named Xu Jiayin, started circling too.
But in China, the ultimate referee is the government. Beijing watched this chaos and decided it was dangerous.
They didn’t want insurance money destabilizing the stock market.
So, the regulators stepped in.
They punished Baoneng and forced Evergrande to back off. Vanke had survived and the Shenzhen Metro Group became their main shareholder.
The barbarians were driven away.
Vanke emerged from the battle looking like the “good guy.” They were the responsible ones, the survivors.
While other developers like Evergrande were borrowing insane amounts of money to build soccer stadiums and electric car companies, Vanke stuck to building houses. They were the adults in the room.
But even the adults were addicted to the same drug: Debt.
A Walk in the Dark
The problem with the “Concrete is Currency” model is that eventually, you run out of people to buy the concrete.
In 2020, the Chinese government realized the entire economy was a bubble. They introduced the “Three Red Lines” strict rules to stop developers from borrowing more money. The treadmill stopped. The money stopped flowing.
The first domino to fall was Evergrande. Then Sunac. Then Country Garden. One by one, the titans of the industry defaulted. But Vanke stood tall. They were “too big to fail.” They had the government backing them.
But the real crisis wasn’t on the balance sheet; it was in the minds of the people. The belief that “prices always go up” shattered.
I witnessed this reality firsthand in Chongqing, a massive metropolis in southwest China. It is a city of fog and mountains, where skyscrapers cling to the hillsides. I went for a walk at night along the riverbank, looking across the dark water at the skyline.
Across the river, I saw a forest of 30-story apartment towers. They were brand new, modern, and sleek. But something was wrong. The only lights I could see were the decorative LED strips on the outside of the buildings.
Inside the windows? Darkness.
Block after block, tower after tower, there were no lights in the living rooms.
No flickering TVs.
No families eating dinner.
It was a ghost city. It was the physical proof of the trap. People had bought these apartments as “safe assets,” parked their money there, and left them empty.
But now, they couldn’t sell them and the “currency” was slowly become worthless.
The Japanese Nightmare
By 2024, this reality caught up to Vanke.
They reported a massive loss.
The “White Knight”, Shenzhen Metro, began to act more like a bank than a savior, demanding collateral for their loans. They took Vanke’s most valuable assets as security.
Why didn’t the government just bail them out fully? Why let Vanke suffer?
Because Beijing is terrified of repeating the mistakes of Japan.
In the 1990s, Japan’s real estate bubble burst, and the country spent the next thirty years in stagnation, the “Lost Decades.”
People were so scared of the future that they stopped spending.
They just sat on their cash. Prices fell, wages fell, and the economy froze.
China is staring at that same abyss. If they bail out Vanke and the other developers too easily, they just re-inflate the bubble. But if they let them crash too hard, they wipe out the life savings of the middle class, causing the same “deflationary spiral” that destroyed Japan’s growth. They are trying to pop the bubble without popping the country.
The Return
So, where does the hero stand today?
Vanke is not dead. It has not liquidated like Evergrande.
The government has stepped in to “guide” the company.
New managers have been appointed.
Vanke is being kept alive because it is simply too big to let die.
But Vanke is no longer a hero.
They are a conflicted figure—a company that helped build modern China, but also helped build the trap that China is now stuck in. They are not a villain, but they are certainly not innocent.
They played the game better than anyone else, until the game itself was cancelled.
The story of China Vanke teaches us a universal lesson about hubris.
There is a final metaphor that explains Vanke’s journey perfectly. It goes back to Wang Shi and his mountain climbing.
When you climb into the “death zone” of Mount Everest, above 8,000 meters, the human body cannot survive on its own. You need an oxygen tank.
For thirty years, debt was Vanke’s oxygen. It allowed them to climb higher and faster than any human being naturally could. It made them feel superhuman. It allowed them to build a skyline that touched the clouds. But the problem with relying on an oxygen tank is that you are not actually breathing the air. You are dependent on the canister on your back.
When the government changed the rules and the market turned, the valve on that tank was twisted shut.
Vanke is currently gasping for air.
The government has opened the valve just a tiny crack, just enough to keep the climber alive, but not enough to let them climb anymore. They are stuck on the side of the mountain, freezing and exhausted.
The lesson for the rest of us is simple: Trees do not grow to the sky.
No matter how smart the code, how strong the bid, or how high the mountain, eventually, you have to come back down to earth.
And as Vanke is discovering, the descent is always the hardest part.