Many financial experts had already declared the ailing real estate group bankrupt months ago. But now the company is making one interest payment after the next. How much longer can Evergrande keep this up?
By Redaktion Table
Supply bottlenecks, widespread power outages, tech companies under pressure, the real estate sector deep in crisis – the world's second-largest economy is currently experiencing a multitude of problems. Many of them are homemade and can be traced back to the government's lust for control. For President Xi, control is essentially more important than growth. But where does he draw the line?
By Felix Lee
The ongoing power shortage and the crisis surrounding real estate developer Evergrande are currently dominating headlines. Even if some assessments turn out wrong, long-term problems still loom. China's policymakers must act now, says Yu Yongding, who for years headed the Institute of World Economy and Politics at the Chinese Academy of Social Sciences in Beijing.
By Redaktion Table
Everyone's suspicions are now being confirmed: Evergrande can't service its loans. The real estate group is missing one payment deadline after another. But the International Monetary Fund still believes China can cope with the situation without major consequences for the entire economy. Meanwhile, Evergrande's car division made a surprise announcement.
By
Huachen Automotive was forced into bankruptcy. Bank Huarong, on the other hand, was rescued. HNA has to go through a painful restructuring. And Evergrande? The decisions to rescue or restructure ailing companies expose Beijing's strategy towards financial market risks. The dilemma faced by Chinese planners is strikingly similar to that faced by regulators in Western countries.
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The debt problems of Chinese real estate group Evergrande have the markets in turmoil. Stephen Roach explains why even bankruptcy would not have serious consequences. However, the US economist sees far greater problems that have their roots in current Chinese politics.
By Redaktion Table
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.
