Radio Free Asia by Chris Taylor 2023.09.29
Property giant Evergrande boss under house arrest as ‘economic miracle’ turns ‘speculative bubble.’Amid reports and rumors of starving zoo animals and retirees not being paid their pensions, the chair of financially distressed China Evergrande Group, the world’s most indebted property developer, is now under “residential surveillance.”
Call it house arrest – and as the Chinese property sector loses its mojo some 42,000 local governments are looking for money to pay off creditors.
Evergrande chairman Hui Ka Yan, or Xu Jiayin, is under 24-hour police supervision and can neither leave his home nor receive guests without permission. He was once the richest man in China.
In 2017, Hui Ka Yan had a net worth of US$42.5 billion, surpassing Alibaba founder Jack Ma and Tencent founder Pony Ma.
Much of China’s prosperity – like Hui’s – probably now begs a question mark, and it’s not just the private property giants like Evergrande; it’s the tens of thousands of local governments that have built out and “modernized” China on what may be the speculative property bubble of all time.
The court is out on the extent to which real estate accounts for China’s GDP – 25% to 30% by most reckonings – but the issue, in a new era of massive oversupply and low demand, is where the new equilibrium will settle.
Says Andrew Collier, managing director of Orient Capital Research, “China has to reduce the size of the property industry by about one-third, which is going to cause a lot of pain for homeowners, local governments and some banks.”
Some analysts might describe that as an optimistic assessment.
‘Too big to resolve’
George Magnus, Research Associate at the China Center, Oxford University says that debt is everywhere in the Chinese system, and the extent of it is difficult, if not impossible to evaluate.
More:
https://www.rfa.org/english/news/china/china-debt-09292023053409.html
