After the fall of promoter Evergrande, the Chinese economy has revolving debt – Libération

Analysis

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In financial difficulties for more than two years, the former real estate development giant was put into liquidation by a court in Hong Kong on January 29. A decline that reflects the crisis the sector is going through, with the world's second largest economic power experiencing a distinct slowdown.

“enough is enough”, decided this Monday, January 29, Linda Chan, a Hong Kong court judge, ordering the liquidation of the fallen real estate development titan Evergrande. The Chinese company, with $240 billion (222 billion euros) in assets, has taken too long to present a viable restructuring plan. Too much debt, as it reached $328 billion in June, a record for this type of activity. Once the liquidation was announced, the stock plunged 20% on the Hong Kong Stock Exchange, prompting a trading halt. Without causing general panic. At the moment, the Evergrande debacle will not turn into a new Lehman Brothers. “If the volumes of non-performing assets can prove to be comparable, Evergrande will remain less connected and less powerful, estimates François Chimits, an analyst at the think tank Mercator Institute for China Studies. In addition, the intervention capacities of public authorities in China mitigate the role and differences in the confidence of investors and savers.

Elliot Frost

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