What happened to Evergrande?
The Chinese government sparked a crisis in the property industry last year when it launched a drive to curb excessive debt among real estate firms as well as rampant consumer speculation.
Evergrande -- a real estate giant with a presence in over 280 Chinese cities -- was the most prominent developer to pay the price for the clampdown.
More than $300 billion in debt, it teetered for months on the edge of default, returning each time from the brink thanks to a last-minute repayment.
On Thursday, Fitch confirmed the company had defaulted for the first time on more than $1.2 billion worth of bond debt, as it downgraded the firm's status to a restricted default rating.
China's 'Lehman moment'?
A slowdown in the Chinese real estate sector, which accounts for a significant proportion of the country's economic output, could have ripple effects on global growth.
Evergrande's woes have rocked stock markets -- and the real estate sector makes up much of distressed dollar-denominated debt internationally.
But a default had long been expected, and fears over a "Lehman moment" -- a reference to the Wall Street titan whose collapse prompted panic worldwide during the 2008 global financial crisis -- have failed to play out.
That's because Chinese authorities have appeared unlikely to allow the kind of overnight collapse seen in 2008, with analysts suggesting instead that Beijing will oversee a "controlled demolition" of the firm.
"Is the financial system here, or elsewhere, as vulnerable as it turned out to be in the wake of Lehman? The answer to that is no," the head of Hong Kong's Securities and Futures Commission Ashley Alder told Bloomberg TV.
What happens now?
Evergrande had already warned that it may not be able to meet its financial obligations, meaning the market had been bracing for the news.
The firm's admission prompted the local government in Guangdong -- where it is headquartered -- to summon billionaire chairman Xu Jiayin, and to announce they would send a "working group" to the company.
Analysts said this moment signalled the formal start of the giant's debt restructuring.
"I'd think the market has already priced in the default in Evergrande's and many others' prices," Chuanyi Zhou, credit analyst at Lucror Analytics, told AFP.
And Thursday's default is likely to speed up that process, they said.
But with the concurrent default of real estate firm Kaisa, China's 27th-largest real estate firm in terms of sales, it may be too late to avoid some kind of ripple effect.
What does it mean for investors?
Having already blamed the firm's woes on "poor management and blind expansion", in the wake of the news of Evergrande's default the head of China's central bank hinted that it would be dealt with in a "market-oriented" way.
Despite the state's reluctance to bail Evergrande out, its moves to contain the crisis has eased investor concern of a disorderly collapse.
"It's pretty clear that the state is seriously involved in managing the situation," Shehzad Qazi, managing director of data analytics firm China Beige Book, told AFP.
"The priority would surely be to ensure that homes are delivered, and what remains afterwards will be repaid according to the priority level of bonds," said Meng Ting, a senior credit strategist at ANZ Bank.
What about other Chinese developers?
At least 11 property firms have defaulted on bonds since concerns started to grow over Evergrande in June.
Chinese property firm Kaisa -- which suspended share trading in Hong Kong on Wednesday -- was among the latest, deepening the woes of a company estimated to have $11.6 billion of dollar notes outstanding.
And property firms made up 36 percent of the $10.2 billion of offshore bonds that Chinese borrowers defaulted on this year, Bloomberg said.
How will China's economy be impacted?
The Evergrande crisis has drawn parallels with government intervention in other indebted companies, notably aviation conglomerate HNA Group.
HNA's restructuring did not cause investor panic -- although Evergrande's higher profile means this time will likely prove a bigger challenge.
But whatever happens to Evergrande, Beijing's broader clampdown has already had a major impact on the property sector and deepened worries over key firms' financial health, bringing home sales and prices down.