What is Evergrande? The Chinese property giant behind global selloff fearsNBC, Sep 23, 2021
HONG KONG — Evergrande Group built a real estate empire on a mountain of debt. Now the Chinese property giant is in trouble — and there are fears it might take the global economy down with it.
The uncertainty fueled a market selloff this week and has raised concerns of a crisis similar to the one set off in 2008 by the collapse of the U.S. investment bank Lehman Brothers. Experts say such comparisons are overblown, not least because the Chinese government exerts a much greater degree of control over even private companies like Evergrande.
But the developer’s predicament could deal a serious blow to the world’s second-biggest economy as Beijing faces what may be one of its largest defaults.
‘Ponzi-like’The cash-strapped Evergrande has sold millions of apartments to China’s growing middle class since being founded in 1996 by billionaire Xu Jiayin, 62 and once China’s richest man. The company, based in the southern hub Shenzhen, says it has more than 200,000 employees, as well as some 1,300 projects in more than 280 Chinese cities.
For years, the model worked.
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It also amassed $300 billion in debt, equivalent to about 2 percent of China’s gross domestic product, making it the world’s most indebted developer. Now a slowing property market and the ruling Communist Party’s efforts to remake the Chinese economy have forced a reckoning with Evergrande's issues.
Sales are down. Construction on some projects has been halted over delayed payments. And the company’s offices in China have been besieged for weeks by angry protesters, many of them employees, who worry they may not recover their investments in Evergrande properties and financial products.
Beijing is reportedly asking local officials to prepare for the fallout from a total collapse.
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