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Evergrande: Authorities are reportedly preparing for collapse


The Chinese real estate giant Evergrande is more than 300 billion dollars in debt, and parts of the interest are due today. According to a newspaper report, the government warns of a "possible storm".

Enlarge image

Construction site of an Evergrande project in central China



The Chinese authorities are apparently instructing local governments to prepare for a possible collapse of real estate company Evergrande.

The "Wall Street Journal" reports and quotes government officials.

Accordingly, the local authorities are now instructed to prepare for the "possible storm".

This instruction is an indication that the Chinese government is not ready to save the company.

Specifically, the local authorities were told to provide security forces to monitor any unrest and, if necessary, to end it.

Local government and private real estate companies are also said to be available to take over failed projects from Evergrande.

Share price had risen sharply in the morning

Evergrande is China's second largest real estate developer and is now more than $ 300 billion in debt.

Part of the interest is due today.

Just yesterday, a company spokesman announced that the company would be able to pay the interest due today on time.

As a result, the real estate company's share price rose significantly, at times by more than 32 percent.

The crisis does not only affect the group itself. Evergrande is seen as representative of China's real estate industry.

This boomed for years and accounts for almost a quarter of the country's gross domestic product.

At the same time, many of the corporations are heavily indebted.

The government in Beijing under President Xi Jinping speaks out against this loan-financed growth.

China expert Max J. Zenglein in an interview with SPIEGEL would set an example if China's government refused to save the company.

A possible bankruptcy of the company could have consequences far beyond China's economy: "It is wrong to fall into alarmism here, but also wrong to simply ignore everything here and say that it is a small local problem," said the president of the Swiss central bank Thomas Jordan on Thursday at a press conference.

The German financial regulator Bafin sees no danger for German banks even in the event of a collapse.

The "exposure of the German financial sector" was "low", the authorities said in response to a request from the FDP.

Evergrande was founded 25 years ago by billionaire Xu Jiayin and builds real estate against prepayment by customers.

jlk / Reuters / dpa

Source: spiegel

All business articles on 2021-09-23

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