The real estate industry in China has undergone rapid expansion since the commercialization and marketization measures of the housing market in 1998. Particularly during periods of economic downturn and crisis, real estate has been utilized as a primary tool for economic recovery, leading to an expansion in market size, with widespread oversupply and price bubbles forming as a result. This outcome is closely related to the debt-dependent management structure of real estate companies. When regulatory measures aimed at improving financial soundness, these companies may face short-term liquidity pressures, revealing the risks of default and bankruptcy. Taking these concerns into account, China has recently focused on preemptively preventing systemic risks arising from the real estate sector, despite the overall market downturn. The ‘Three Red Lines Regulation’, introduced to correct the excessive debt management of real estate companies and enhance financial soundness, is seen as a measure aimed at preventing these risks. This study aims to analyze the changes in real estate sector policies and examine the impact of the ‘Three Red Lines Regulation’ on the debt repayment ability of real estate companies by tracking changes in relevant key indicators. Chapter 3 reviews the general status of the Chinese real estate market and the changes in policies within the real estate sector. This chapter confirms that excessive concentration of credit resources in real estate, the debt-dependent management structure of real estate companies, and the vulnerability of private Chinese companies in the real estate sector have ultimately led to a shift in policy direction as the authorities became more aware of the risks in the real estate sector. Chapter 4 of this study explores the impact of the ‘Three Red Lines Regulation’, implemented amidst changing perceptions and policy directions in the Chinese real estate market, on key indicators of debt repayment ability, such as the interest coverage ratio of major real estate companies. This analysis was conducted using literature reviews, statistical analyses, and other quantitative methodologies, with references to data from sources such as the National Bureau of Statistics of China, Wind, the People's Bank of China, and academic materials. The results of this study first confirm that, instead of utilizing real estate as an economic stimulus tool with aggressive support measures during periods of economic downturn as in previous crises, China has shifted its policy focus toward risk control and stable management. Starting with the supply-side structural reform in 2015, China recognized the expansion of debt in the real estate sector as a major risk factor for the real economy, and in the Central Financial Work Conference of 2017, it placed special emphasis on preventing these risks. In the Central Economic Work Conferences of 2022 and 2023, China continued to focus on prevention and regulation, ensuring that no systemic risks originating from the real estate sector would emerge, with the ‘Three Red Lines Regulation’ being an extension of this policy direction. Regarding the impact of the ‘Three Red Lines Regulation’ on the debt repayment ability of real estate companies, it was observed that the cash flow and debt repayment capacity of many real estate companies, including Evergrande Group, weakened after the implementation of the regulation. This was confirmed through changes in trends across seven key indicators, such as the interest coverage ratio and cash ratio. However, this study did not fully explore the asset quality, distress levels, and overall risk in China's real estate market. Future research will focus on a more comprehensive assessment of these factors, including stress testing of major real estate companies.