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Property developer China Evergrande has filed for bankruptcy protection in the US, as the company pursues a prolonged restructuring agreement with international creditors that hold billions of dollars in bonds.

Evergrande defaulted on its dollar-denominated debts in late 2021, sparking a sector-wide liquidity crisis that has weighed on China’s economic growth and put increasing pressure on policymakers in Beijing. The company has about $19bn in overseas liabilities, according to Bloomberg data.

Fellow developer Country Garden, the largest privately owned homebuilder in China which was until recently seen as safer than many of its highly-levered peers, also missed payments on its international debts this month, and investment group Zhongrong similarly failed to repay savings products.

The incidents renewed fears of a slowdown in the property sector, which typically drives more than a quarter of China’s economic activity. The turmoil threatens to spill over to other areas of the economy, just as Beijing is grappling with deflation, weak exports and soaring youth unemployment.

Chinese authorities have been working to shore up confidence in the economy after disappointing readings on consumer spending. The official gauge of youth unemployment was discontinued on Tuesday, weeks after hitting a record high, while the People’s Bank of China also unexpectedly cut a benchmark interest rate by the biggest margin since the coronavirus pandemic.

Chinese stocks and bonds have fallen this month, with Hong Kong’s Hang Seng index declining more than 21 per cent from its recent peak to fall into bear market territory on Friday.

Evergrande, the world’s most indebted developer with liabilities of $340bn, last month unveiled losses of $81bn over 2021 and 2022. The losses showed that its business model of getting customers to pay for flats before they are built is no longer sustainable.

Its bankruptcy filing in a New York court, signed by the company’s foreign representative Jimmy Fong, relies on the so-called Chapter 15 process for foreign companies seeking recognition of their restructuring in the US.

The group is expected to hold meetings with creditors in Hong Kong this month over a restructuring plan proposed in March.

Evergrande had about $20bn in international bonds at the time of its default and proposed providing investors with notes linked to the group’s listed subsidiaries in Hong Kong.

Dozens of Chinese developers have defaulted on their debts since Evergrande’s collapse. Beijing, which launched a deleveraging campaign in 2020 that sought to avoid overheating house prices, has so far stopped short of any major bailout or stimulus and instead sought to complete unfinished projects.

In China, homebuyers often purchase apartments prior to their completion. Data this week showed new home prices fell in July.

Missed payments from Zhongrong, part of a so-called trust industry that directs trillions of renminbi into investments across the economy, has fuelled concern over the shadow finance sector’s exposure to the struggling property sector.

Zhongrong sued Evergrande in May 2022 over an investment of Rmb1.9bn ($260mn), an annual filing of Evergrande’s corporate bonds showed.

Additional reporting by William Langley and Andy Lin in Hong Kong