Investors are bracing for an all-out market collapse as Shenzhen-based real estate giant Evergrande approaches deadlines to repay large chunks of its mounting debt—repayments that Chinese authorities have warned are likely not coming.

Here are the key things you need to know, and why investors are spooked: 

US$300B: The approximate amount of liabilities Evergrande holds. The company’s debt represents about 6.5 per cent of everything held by China’s property sector, according to Swiss bank UBS. The company—whose business sprawls into electric vehicles, media production, sports and theme parks, among other verticals—is due to repay about US$100 million of that debt on Thursday, including US$83.5 million for interest on an 8.25 per cent, five-year dollar bond and US$36 million on an onshore bond. The firm was also meant to pay interest on bank loans this week. All in, Evergrande owes about US$669 million by the end of the year. 

“Probable” default: China’s Ministry of Housing and Urban-Rural Development told banks last week that Evergrande likely won’t be able to pay its debt. The warning follows fears of a liquidity scare triggered last year amid shrinking revenues and profits, and new policies meant to rein in borrowing in the country’s real estate sector. Credit-ratings firms Moody’s and Fitch Ratings both downgraded the company this month, with the latter noting that “a default of some kind appears probable.”

The “chain effect”: Investors and industry experts predict Evergrande’s challenges will touch other parts of the highly leveraged real estate sector and even the global economy. The Hong Kong-based Hang Seng Index logged its biggest drop in nearly two months, as Evergrande fell more than 10 per cent. The Hang Seng Properties index dropped to its lowest level since May 2016, losing 6.7 per cent on Monday. “Evergrande is just the tip of the iceberg,” said Louis Tse, managing director at Hong Kong-based brokerage Wealthy Securities, noting that repayment pressure and impending regulations on domestic real estate could set off “a chain effect” in the market. The Dow Jones Industrial average and the S&P 500 each lost over 1.7 per cent on Monday, the Nasdaq Composite shed 2.2 per cent, and the S&P/TSX Composite fell 1.83 per cent, with investors linking the drop in part to China’s real estate sector selloff. 

The broader crackdown: The market response to the looming real estate correction is compounded by a sweeping government crackdown on private Chinese companies. The Xi government has tightened rules for a range of industries, citing data privacy and antitrust concerns, following years of unbridled growth for many private companies. President Xi Jinping has also slapped curbs on the country’s real estate industry, ensuring that giants like Evergrande are not immune to China’s mission of regaining control of the private sector.