For decades, China’s Evergrande Group has been a symbol of the fast-growing Asian economy. The growing income in the country has become an engine of the real estate sector. And he, in turn, turned Evergrande into a real giant, and its founder Su Diain into a billionaire.
But as the Chinese government began tightening housing lending rules, as property demand began to weaken, industry leaders began to feel severe pressure to cover their rising debts. And the most obvious example of this is Evergrande.
The company has a huge business in China, having completed more than 1,000 projects in the country. But given that its debt currently stands at more than $ 300 billion, analysts expect it to undergo a restructuring process.
A Chinese real estate giant valued at nearly $ 100 billion has fallen into a debt crisis
Dissatisfied investors besieged Evergrande’s headquarters as the company said the sale of assets would not cover debts
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The giant’s dollar-denominated liabilities are projected to be cut by 70%, which would be very bad news for its creditors. And this adds to the leader’s record 80% drop in shares since the beginning of the year.
The problem with Evergrande really seems huge even against the background of a country like China. The company is facing complaints from home buyers in its projects, as well as real estate investors, who fear that its new projects will not be ready in time.
As a result, many of them have started protests in the country in recent days, something that is a rare phenomenon for the country, says Quartz.
In total, Evergrande has debts of more than $ 300 billion, or an amount equal to Portugal’s total public debt, for example.
This makes the company not only one of the most heavily indebted companies in the world, but also a real headache for Beijing.
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She forced her employees to sell real estate so that her report could look good
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If the giant, which still has a business in the electric car industry, a football team and a bottled water maker, fails to deal with its problems, it means even more serious discontent, protests, but also a serious financial risk for the second largest economy. in the world.
However, some analysts believe that such a scenario will not occur. According to Victor Shih, an associate professor at the University of California, San Diego, the situation with Evergrande should not be seen as a signal of serious problems in industry in China.
“Evergrande has been one of the most popular builders in China for years, and many predicted his death but made a mistake,” he said.
“The current problems are more related to the tight monetary and banking policy, which may affect other large companies in the country.”
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