- A Hong Kong court on Monday ordered the liquidation of real-estate developer China Evergrande Group.
- Evergrande is the world’s most indebted developer with more than $300 billion of total liabilities.
- It defaulted on its debt in 2021, sending China’s struggling property sector into a tailspin.
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A Hong Kong court on Monday ordered the liquidation of China Evergrande Group, a move likely to send ripples through China’s crumbling financial markets as policymakers scramble to contain the deepening crisis.
Evergrande, the world’s most indebted developer with more than $300 billion of total liabilities, sent a struggling property sector into a tailspin when it defaulted on its debt in 2021.
That deepened a debt crisis in the sector and sparked many other company defaults in a damaging economic blow that to this day remains a drag on growth.
A liquidation ruling of the developer which has $240 billion of assets will likely jolt already fragile Chinese capital and property markets.
Beijing is now grappling with an underperforming economy, its worst property market in nine years and a stock market wallowing near five-year lows, so any fresh hit to markets could further undermine policymakers’ efforts to rejuvenate growth.
They are on borrowed time. Chinese economic growth is investment based and now they’ve built enough condos to house their entire (huge) population twice. This will ruin the value of houses, which is where ordinary Chinese have their savings. Coupled with their poorly thought out demographic policy this will cause an insane crisis as the life savings of elderly Chinese evaporate while they don’t have the working population to recover from this. There’s this guy Peter Zeihan on YouTube who explains it better than I can. He expects China to be done within a decade.
I’m just wondering if they will attempt to invade Taiwan before that happens. They might not even be able to but with Xi completely out of touch with reality they might anyways
Everyone has been screaming China is donezo for over a decade. China is still the leading manufacturer of world goods.
Evergrande collapsing is going to be a massive hit but I don’t think it will put China in the dumpster completely. Most nations have a similar debt mountain somewhere. Our own housing markets are in a similar bubble to China’s.
Isn’t the US trillions in debt, with a large part of it to China?
No, most of the debt is owned domestically by the people
Most debt is owned by other Government institutions, the Federal Reserve, and the like. A lot of the US’s public debt exists as ledger entries to mark which departments of the government owe which other departments. This allows extra money earmarked for one department to indirectly be used for other things instead of just being allowed to sit unused.
Besides, almost all of the debt is in dollars, so worst case scenario, money printer goes brrrrrr
Yeah you’re right. One article says 29 trillion domestically and only 1 to China.
The difference is that in western markets, (thanks to immigration) the population is still growing (for now) and the construction industry still hasn’t recovered from 2009 afaik. So you got the same number of houses for more people, therefore skyrocketing prices
No housing prices are skyrocketing because of cheap mortgages. Nobody would have the money to buy a house if loans weren’t so ridiculously cheap.
The exact same thing that caused the crisis in 2008
Also China could accept immigration too if they were desperate. For now their focus seems to be robotics but if they fail to automate sufficiently immigration remains an option. I heard they have some empty housing complexes rotting away…
Peter Zeihan is full of shit. He’s been predicting China will collapse in a decade for well over a decade now. Here’s a video explaining some of the basic mistakes he makes in his analysis.