Heavily indebted property giant Evergrande, which defaulted in 2021 triggering China’s current real estate market crisis, faced new difficulties yesterday when shares in the crisis-hit corporate were suspended in Hong Kong.
This came amid reports that its chairman had been placed under police surveillance, and that other current and former executives had also been detained.
Evergrande – once rated as the world’s most valuable property developer – is at the centre of a real estate crisis threatening the world’s second largest economy, the BBC reports.
With more than $300bn of debt, the firm has been scrambling to raise cash by selling assets and shares to repay suppliers and creditors.
In August, the firm filed for bankruptcy in New York in a bid to protect its US assets as it worked on a multi-billion-dollar deal with creditors.
BBC business reporter Mariko Oi notes that among the risks associated with Evergrande’s crisis is the potential impact on China’s financial system, as a default by Evergrande could lead to a credit crunch.
This would be ‘very bad news for the world’s second largest economy, because companies that can’t borrow find it difficult to grow, and in some cases are unable to continue operating’.
[Image: Jeremy Zhu from Pixabay]