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China's Evergrande faces a liquidation order with a $300 billion debt burden

China's Evergrande faces a liquidation order with a $300 billion debt burden

Posted on January 29, 2024   |  

A Hong Kong court directed China's Evergrande to liquidation after a failed attempt to restructure a $300 billion debt, causing concerns about China's increasing debt burden.

China Evergrande Group, one of China's major developers, collapsed under pressure from authorities to control rising debt, seen as a risk to China's economic growth.

A crackdown on excessive borrowing triggered a crisis in the property industry, impacting the economy as many developers face difficulties, affecting financial systems within and outside China.

About 90% of Evergrande's business is in mainland China, and its chairman was detained in September on suspicion of "crimes."

The consequences of the liquidation order on China's financial system and Evergrande's operations remain unclear, as the company struggles to deliver housing for which payment has been received but not yet handed over.

Evergrande's Hong Kong-traded shares fell by 21%, leading to a suspension of trading, while other property developers experienced mixed market reactions.

Evergrande's initial default in 2021 follows Beijing's efforts to limit lending to property developers and cool a property bubble, contributing to the company's ongoing financial challenges.



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