Evergrande, one of the world’s biggest real estate corporations which once grew bigger than US giant Ford Motor Company, has filed for bankruptcy. The move has triggered fresh concerns among experts and analysts about the real estate crisis which has engulfed China since 2021. Many are fearing the move for bankruptcy by Evergrande, which has debts of over $300 billion, is just the beginning of the crisis.
Experts are highlighting Evergrande’s collapse as a cautionary tale for China’s “growth-at-all-costs” that made the country an economic superpower in a 3-decade journey. Evergrande was Chinese real estate sector’s crown jewel for decades. The fall happened when China shifted its policy a couple of years ago and left Evergrande and other big real estate developers scrambling for cash.
In 2021, China acted to curb excessive borrowing in a big to control rising housing prices. However, it led to Evergrande failing to make its debt payments for liabilities of 300 billion USD. The company defaulting on payments in December that year triggered panic in real estate market of China. It was followed by a string of defaults as construction of several projects came to a standstill.
With Evergrande filing for Chapter 15 bankruptcy this Thursday, all eyes are on another giant Country Garden which has also missed two payments on its multibillion-dollar debt. The company is now seen by analysts as a “very high risk” asset with Moody’s downgrading its rating last week. Country Garden has till early September to make the payments it has missed.
(Inputs from ANI)
