China's property crisis could get even uglier. This time, a state-backed developer is the one raising concerns.

• China's years-long property crisis could get worse.
• There are concerns over Vanke amid reports the state-backed property developer was seeking debt maturity extensions.
• If Vanke defaults, it could undermine confidence in all property developers in China.

China's years-long real-estate debt crisis has already taken down property giant Evergrande, which is undergoing liquidation.

Home sales and prices in the country have also slumped.

But China's property crisis could still get worse.

"I think, at the moment, there's an assumption in the market that the levels of activity have come down so much that things can't get much worse, but that's not really true," Charlene Chu, a senior analyst at Autonomous Research, told Bloomberg TV on Monday.

Chu — who issued warnings about China's debt more than a decade ago — said China is still "very much in the middle of a collapse in the property sector and this could still get uglier than it already is."

Concerns grow over another Chinese real-estate giant

Chu's assessment of China's property market comes as concerns brew over Vanke, a state-backed developer and the country's second-largest developer by sales last year.

Investors have been dumping Vanke's shares and bonds this month after reports that the company was seeking to extend the maturity of its debt with insurers — an indication it's in a cash crunch.

On Friday, Vanke said it had deposited funds to repay $630 billion in notes due on Monday. Beijing has also asked banks to boost financing for Vanke and called on creditors to extend debt maturity, Reuters reported on Monday, citing two unnamed sources with knowledge of the matter.

Authorities are coordinating Vanke's discussions with banks to help the developer avert a default, Bloomberg reported on Tuesday, citing unnamed people familiar with the matter.

Beijing's intervention in Vanke underscores just how important the massive property firm is to China's economy. Last year, it sold 375.5 billion Chinese yuan, or $52.2 billion, worth of real estate.

But Vanke's importance is not merely about the number of apartments it sells — which is a lot, since it consistently ranked as one of China's top developers for at least the last decade. Instead, it's about the fact that it's a huge, state-backed company. State-owned Shenzhen Metro holds one-third stake in Vanke.

Despite China's property downturn, Vanke was considered a financially sound developer and one of the few Chinese developers that still holds investment-grade credit ratings from S&P Global and Fitch. Moody's downgraded Vanke to junk on Monday.

Notably, Beijing's move comes just days after Ni Hong, China's minister for housing and urban-rural development, said the country would not bail out distressed property developers.

"Real-estate companies that are seriously insolvent and have lost their operating capabilities must go bankrupt and be restructured in accordance with the principles of the rule of law and marketization," Ni said at a press briefing.

However, Vanke is different — because any default from the company would undermine confidence in state-owned developers, said Chu.

"I think that could really lead to a loss of confidence in almost every developer in the country if state-owned entities aren't safe," she told Bloomberg.

There are also fears that China's property crisis could spill over into the broader domestic and cause contagion in the global economy.

Vanke and China's State Council Information Office did not immediately respond to requests from Business Insider for comment.