August 20, 2023
1 min read

Evergrande’s bankruptcy warning on growth strategy

Evergrande’s liquidity crisis was just the beginning of the pain. …reports Asian Lite News

Property developer Evergrande’s US bankruptcy serves as a cautionary tale about the growth-at-all-costs model that underpinned China’s spectacular growth over the past 30 years, the media reported.

For decades, Evergrande, once one of China’s most successful real estate developers, gobbled up debt as China’s economy exploded. Demand for housing was so strong, homebuilders often pre-sold apartment units to buyers before construction was complete, CNN reported.

But a sudden shift in policy by China’s leaders two years ago has left the country’s property developers scrambling for cash, compounding a financial risks within the world’s second-largest economy, CNN reported.

Evergrande’s liquidity crisis was just the beginning of the pain. Other large builders in China have since defaulted as they struggle to shore up cash and demand for housing has fallen.

Now, investors around the world are watching nervously as Country Garden which employs some 300,000 people, missed two payments on its multibillion-dollar debt and said it was considering “various debt management measures”, CNN reported.

The cash-strapped developer’s debt is now seen as a “very high risk” asset, according to Moody’s, which downgraded its rating on Country Garden last week, CNN reported.

Country Garden has until early September to make the payments it missed.

It’s hard to overstate the importance of the property market China. The industry accounts for as much as 30 per cent of the country’s economic activity, and more than two-thirds of household wealth is tied up in real estate.

But nearly three years of “zero Covid” restrictions sapped China’s economic growth, and consumers have been reluctant to buy new homes in the face of higher unemployment and falling property values, CNN reported.

ALSO READ: Taiwan calls China “bully next door”

Previous Story

Amazon joins creators payment trend, offers $25 per video

Next Story

New Mascot Duo to energise ICC world cup events

Latest from Business

Nykaa Expands Global Footprint with UK Debut

To commemorate this significant global debut, Nykaa’s leadership hosted an exclusive soiree at the George Club in Mayfair, London Nykaa, India’s leading beauty and lifestyle destination, is set to make a grand

Nothing’s CMF Goes Indian with $100M JV

Company has announced a $100 million joint venture with Indian electronics manufacturer Optiemus Infracom Limited….reports Asian Lite News Smartphone maker Nothing has spun off its budget sub-brand CMF into an independent subsidiary,

Airbnb Boosts India Economy

Among international guests, the largest inbound sources were the United States, United Kingdom, Canada, and Australia Hospitality giant Airbnb made a significant impact on India’s economy in 2024, contributing Rs 113 billion

Rupee, Markets Gain Amid Trade Optimism

Emerging market currencies, including the rupee, have gained support amid softening in the dollar. Reports suggesting that the US economy is on the verge of a recession have contributed to the greenback’s

Deadline Nears, India–EU Talks Heat Up

The success or failure of this round will shape how the two sides proceed, especially on difficult issues that have long blocked progress….reports Asian Lite News India and the European Union on
Go toTop

Don't Miss

Beijing intervenes to prevent disorderly collapse of Evergrande

Fitch Ratings had declared on Thursday that the embattled property

Another headwind hits China housing market

It comes a day after shares in one of China’s