The large Chinese company
Evergrande declared bankruptcy in the United States
A construction project of Evergrande Company reaching a multibillion-dollar deal with creditors will allow the debt-ridden company to protect its real estate assets in the United States.
Giant Chinese real estate company Evergrande has filed for bankruptcy protection in the United States amid a deepening real estate crisis in China.
 |
| Chinese company Evergrande |
Evergrande's huge debt defaulted in 2021. At that time, this incident caused an uproar in the global financial markets.
These problems in China's real estate sector have been added to the growing concern about the world's second-largest economy.
Now China Evergrande Group filed for bankruptcy protection in a New York court on Thursday.
Why is the opposite happening in China when inflation is happening all over the world?
The pain of 'disillusionment' is emerging in the memes of Chinese youth
Why are young people in China leaving work and returning home to be 'full-time children'?
Evergrande Group's real estate sector alone has an estimated total debt of over $300 billion
Evergrande Group's real estate sector alone has an estimated total debt of over $300 billion
A chapter of the law called Chapter Fifteen protects the US assets of a foreign company so that the company can negotiate with its creditors to repay its debts.
Evergrande declined to comment when contacted by the BBC.
According to the website of China Evergrande Group's real estate arm, the company has more than 1,300 construction projects in more than 280 cities in China.
The group's many other businesses include electric car manufacturing and a football club.
Evergrande is resuming deal negotiations with its lenders after defaulting on debt.
The real estate sector alone of this group had a total estimated debt of more than 300 billion dollars. It is the world's most indebted property development company.
Customers protest in Shanghai after real estate company halts construction
Customers protest in Shanghai after real estate company halts construction
The shares of this company have been closed since last year.
Evergrande disclosed last month that the company posted a loss of 581.9 billion yuan ($80 billion) in the past two years alone.
Not only Evergrande, another giant Chinese real estate company, Country Garden, also warned last week that it expects to lose $7.6 billion in the first six months of the current fiscal year.
Some of China's real estate giants are struggling to find investors to finish projects under construction.
"At the root of the problem is completing unfinished projects because that would at least get some financing," said Steven Cochran of financial research firm Moody's Analytics.
Many houses in the real estate sector are sold before they are built. But if construction stops for some reason, buyers also stop making mortgage payments. As a result, it puts more pressure on the income of real estate developers, he explained.
China's construction projects were growing at such a rapid rate that there were concerns about its risks
China's construction projects were growing at such a rapid rate that there were concerns about its risks
Meanwhile, the Chinese government said earlier this month that deflation had begun in the country's economy and that consumer prices fell in July for the first time in more than two years.
Weak economic growth means prices for Chinese goods are falling.
Imports and exports also fell sharply as global demand for Chinese goods fell. As a result, the possibility of reviving the world's second-largest economy after the Covid pandemic is now under threat.
Chinese exports fell 14.5% in July from a year earlier, while imports fell 12.4%, official figures showed.
Earlier this week, China's central bank abruptly cut key interest rates for the second time in three months in a bid to boost the economy.
No comments