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The problems follow one another for Evergrande. This time, it is a subsidiary of the former number one in Chinese real estate which can no longer honor its debts. The financial health of the group worries the authorities. Real estate threatens the entire Chinese economy. The sector alone accounts for a quarter of the country’s GDP.
In difficulty, one of Evergrande’s subsidiaries has just been ordered to pay 1.3 billion dollars. This is the guarantee, for a refund not honored. This announcement comes as the Chinese real estate giant just changed direction. It also sold its Hong Kong headquarters. Strangled by debt of approximately 300 billion dollars, the group should also present a restructuring plan.
It’s urgent. In the wake of Evergrande, other promoters, big or small, could falter. Over-indebted, more and more of them are having difficulty completing their projects and handing over, in due time, homes sold before their construction. At the end of July, more than 320 projects were involved in 90 cities across the country.
In retaliation, owners, exasperated, refuse to pay their mortgages, contributing to aggravate the crisis in the sector. A social rebellion which represents a risk for the banks and a concern for the regime. The real estate sector accounts for more than a quarter of China’s GDP.