The Evergrande crisis is testing Beijing’s fallout management as creditor jitters mount. Evergrande is one of China’s largest property developers, and it is facing a debt crisis of over $300 billion. The company has been unable to make payments on its debts, and it has defaulted on some of its bonds.
Evergrande, previously the Hengda Group, was established in Guangzhou, southern China, by businessman Hui Ka Yan in 1996.
Evergrande Real Estate presently has more than 1,300 projects in more than 280 locations around China, according to the business’ website.
Evergrande’s financial crisis first came to light in 2021, and since then a number of its competitors have also defaulted on their loan obligations abroad amid declining home sales and fewer new fundraising opportunities, prompting concerns about a possible larger contagion that might affect the nation’s banks.
The Evergrande crisis is a major concern for Beijing because it could have a ripple effect on the Chinese economy. Evergrande has a large number of creditors, including banks, suppliers, and homeowners. If Evergrande collapses, it could lead to a wave of defaults and bankruptcies throughout the Chinese economy.
Beijing is attempting to control the effects of the Evergrande issue by giving the company financial support and promising creditors that the government will prevent Evergrande from going under. Investors are becoming more and more anxious about the Evergrande situation, though, and they are concerned that the government might not be able to preserve the business.
By giving Evergrande financial support and promising creditors that it won’t let the company fail, the Chinese government is attempting to control the Evergrande situation. But it’s not certain if the government will succeed in saving Evergrande.
“We wanted to help our son, to give him a place to start out on once he graduates from college,” Mrs Guo told the BBC .
“We saw the main frame being built, and suddenly we heard that Evergrande was falling. Then construction stopped last year,” she says.