https://carnegieendowment.org/chinafinancialmarkets/
Good analysis here. I've been reading Pettis for a decade or longer. He's insightful and sober. I wonder how it is that the CCP tolerates his existence, but perhaps his writing doesn't get through the Great Firewall to domestic Chinese readers.
The role of property - in particular urban condos - in China is as the primary store of wealth for the wealthy and near-wealthy. Affluent families will buy and sit on 3, 4, 5 condo units as investments, much like affluent US families will own stocks and bond portfolios. Many of those condos are vacant, some aren't even finished , they are investments rather than housing. Meanwhile non-affluent Chinese face a housing shortage and prices higher, relative to their incomes, than we see in the US. The CCP has been trying to force property to be housing and control housing prices.
China also has a debt problem, different from and in some ways bigger than the US debt problem. In the US, the fastest-growing debt is US govt debt, essentially part of the money supply which the US government can both issue and buy (Treasury and Fed). In China, the fastest-growing debt is private (individual, corporate, local province). It has long been assumed that much of this private debt is quasi-govt debt, in the sense that the Chinese govt ultimately stands behind it. The CCP is trying to break markets of that assumption.
Evergrande's collapse was triggered by the CCP's imposition of controls on developer debt, which is part of the efforts mentioned above. The CCP knew or should have known the collapse would happen (Evergrande's founder is extremely highly connected). The CCP shows no signs of easing - witness recent moves against Hong Kong property developers.
If the CCP sat back and let the whole sorry mess spiral out of control, I think it would spread widely in the Chinese economy and eventually to the US. Not that Americans own much Chinese stocks, bonds, or property. But China is the #1 or #2 importer of US goods and services, and the leading exporter to the US, so broad slowdown and disruption in China will impact the US. The markets of course try to anticipate and front-run that.
My guess is that the CCP will step in to control it, perhaps with the Chinese property development sector becoming quasi-nationalized (kind of like what is happening to the Chinese social tech sector - the CCP doesn't "own" BABA but it will control BABA's key assets, tell BABA what it can do and how, and require BABA to donate a large portion of its profits to support CCP initiatives).
In the US, free market capitalism is our core system. In China, it is just a tool of the CCP - they are communists after all.
Anyway, I dumped almost all my China exposure several months ago and don't plan to be lured back in until the new rules of the game are clearer.