Because their apartments are not being completed, tens of thousands of buyers threaten to stop paying their mortgages. The government is on high alert. Will the real estate crisis escalate?
By Jörn Petring
Despite abundant evidence of Evergrande's bankruptcy, a formal filing for bankruptcy remains nowhere in sight. A rescue plan is to be presented by mid-year. The creditors' bankruptcy petitions were apparently unsuccessful. Speaking with Christian Domke Seidel, lawyer Elske Fehl-Weileder explains the underlying reasons.
By Christian Domke Seidel
Evergrande has run out of money – that much is clear. The company cannot even present its annual balance sheet. This process shows: Large corporate bankruptcies often do not end with bankruptcy proceedings. Especially in China, an agonizingly long phase of denial of reality usually follows instead.
By
The bankruptcy of the Chinese real estate developer Evergrande gripped international stock markets in 2021. Protests by desperate Evergrande investors and rescue attempts through e-mobility investments as well as China’s "three red lines" policy followed suit. Read all the important and latest news on China’s Evergrande from the China.Table editorial team.
Evergrande is one of the largest property developers in China. It is currently also the most indebted real estate group in the world. In the fall of 2021, Evergrande was no longer able to come up for its hundreds of billions of dollars in debt. The crisis posed an immense challenge to the Chinese financial and real estate system.
The real estate sector accounts for more than a quarter of China's economic growth. Seventy percent of the wealth of Chinese households lies in real estate. A collapse of the sector could thus lead to sentiments from the public. To counteract the collapse of the Chinese real estate market and the unrest within the population, the Chinese leadership introduced "three red lines" even before Evergrande’s bankruptcy. In addition, Evergrande also invested in the electric mobility sector with Evergrande's subsidiary Evergrande New Energy Vehicle (NEV).
The Evergrande crisis is far from being solved in 2022. After the insolvency announcement and rescue attempts using the subsidiary Evergrande New Energy Vehicle in the field of electric mobility, domestic investors seem to slowly breathe a sigh of relief. Furthermore, the government tried to ease the worries on the real estate market by lowering interest rates at the end of 2021.
