Xi Jinping, China’s president, has targeted “unsustainable” economic growth in recent months, along with his drive against the country’s increasingly powerful tech billionaires. On Tuesday, a stock exchange filing showed that Evergrande had outstanding liabilities worth 562m yuan ($87m) to a supplier called Skshu Paint and repaid some of the money in the form of apartments in three unfinished property projects. “There is a lack of confidence and lots of rumours, the key is that we still don’t see a clear plan,” a stock exchange trader told Reuters.
Investors questioned how Evergrande was going to dispose of assets in order to repay debts without a clear plan. Along with Beijing’s tougher regulation, these factors have made it much harder for Evergrande to dispose of unsold properties even with huge discounts. The value of new home sales has fallen 20% in China since the peak in the first three months of this year, and the value of land sales are also sharply down.
The company has run up liabilities totalling more than $300bn, after years of borrowing to fund rapid growth and a string of real estate acquisitions as well as other assets including a Chinese football team.īut the firm has struggled to service its debts and a crackdown on the property sector by Beijing has made it even harder to raise cash, fuelling concerns it will go bankrupt. Evergrande claims to employ 200,000 people and indirectly generate 3.8 million jobs in China. There were also reports from China on Wednesday of employees protesting outside the company’s offices about salaries not being paid. China Evergrande Property: 3.41 -8.09% /c5P4qWARst- IGSquawk September 9, 2021
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