Just a few months ago, Country Garden was the biggest property developer in China, with more than 3,000 developments spanning the country.

Now, the company is struggling to survive in a crisis-hit industry, where many others are in the same boat.

On Wednesday, Country Garden reported a record loss of 51.5 billion yuan ($7 billion) for the first half of this year — and confirmed that it is teetering on the brink of defaulting on its vast debts.

"The company felt deeply remorseful for the unsatisfactory performance," it said in a filing to the stock exchange.

It had been caught "off guard" by the depth and persistence of the slump in China's real estate market, it said, particularly in smaller cities, and had failed to react fast enough.

Real estate accounts for between a quarter and third of China's gross domestic product (GDP). What happens next could have huge consequences for the world's second biggest economy and its financial sector. Here's what you need to know.

Can Country Garden continue?

Ranked No.1 by sales last year, Country Garden is one of the few major private developers still standing after a liquidity crisis engulfed the property sector two years ago.

But the company has $194 billion in total liabilities, of which $15 billion are due within 12 months. It has only 101.11 billion yuan ($13.9 billion) in cash.

On Wednesday, it tried to pay off one creditor by issuing new shares. But in its filing later that day, it confirmed that it had missed interest payments to some bondholders earlier this month and that, if the financial performance of the company continues to "deteriorate in the future," the group may default.

"All of the above ... indicated the existence of material uncertainties which may cast significant doubt on the group's ability to continue as a going concern," it added.

The group has a grace period until early September to make good on the missing bond payments.

The fact that a once seemingly bulletproof firm is struggling with a cash crunch underscores how entrenched the property meltdown has become. It also highlights the challenges Beijing faces to contain the problem.

Investors fear that a debt default by the company could deal a further blow to what is already fragile investor confidence as Beijing seeks to revive demand in the real estate market.

A default by Country Garden or another peer could also spread to China's wider economy and even spill over into global markets. Fears of financial contagion were stoked earlier this month when Zhongrong Trust, one of the country's largest private trust companies, missed payments on several of its investment products to its investors.

Another developer cancels a share sale

Country Garden is not the only one in trouble.

China Vanke, the country's third largest residential developer last year, on Thursday reported a 19% drop in net profit in the first six months of this year.

The Shenzhen-based developer also canceled plans to raise as much as $2.1 billion by issuing new shares, saying its stock was valued at a "low level" and that a sale would therefore hurt existing investors.

CEO Zhu Jiusheng said during an earnings call that the company faced "pressure in short-term profitability."

"The entire industry has undergone profound changes, and its gross profit margin has continued to decline," he said. "The previous method of buying a large amount of land with high leverage ... has become unsustainable."

Vanke's shares have fallen 25% this year to their lowest level since last October.

Its chairman, Yu Liang, said all players in Chinese real estate were under "unprecedented pressure."

"We cannot see the future clearly, and it is not easy for everyone," he said during the call.

Beijing has announced a flurry of stimulus measures to bolster the real estate sector in recent days, including easing mortgage curbs for homebuyers. Yu said that could have a calming effect on anxious markets.

"The current policies are already working, and we hope that the measures that have been announced can be implemented as soon as possible," he added. "We also look forward to more."

What happened to Evergrande?

China's property woes emerged in 2021, when Evergrande defaulted on its debt. This week's news from Country Garden and Vanke suggest the crisis might not have bottomed out yet.

Property investment dropped 8.5% in the first seven months of this year, according to data released by the National Bureau of Statistics earlier this month.

New home sales by the country's 100 biggest developers plunged 33% in July from a year ago, marking the steepest decline in 12 months, according to statistics from China Real Estate Information.

For years, many developers borrowed heavily to build and sell properties at a breakneck pace. They racked up huge debts, which many ended up defaulting on.

Evergrande is still trying to dig itself out of that very deep hole.

Earlier this month, it applied for bankruptcy protection in the United States, a move which is part of its attempt to restructure its massive debts.

On Sunday, Evergrande reported a significant narrowing of its net losses for the first half of the year, thanks to a rise in revenue. But it still lost $4.5 billion.

The company's ability to continue as a going concern still depends on whether it can successfully complete the offshore debt restructuring plan, it said.

Other than Evergrande, Chinese developers that have defaulted so far include Kaisa Group, Shimao Group and Times China.