China Evergrande Group, the heavily indebted real estate developer, continues to face challenges as the Shenzhen police detain staff from its wealth management unit. This latest setback adds to the company’s already dire financial situation.
According to a statement from the Shenzhen police, “criminal coercive measures” were taken against individuals, including someone named Du, at Evergrande Group’s financial wealth management company in Shenzhen. However, it remains unclear who Du is, and the company has not provided any comment regarding the situation.
Earlier media reports had mentioned a person named Du Liang as the head of Evergrande’s wealth management unit. These reports highlighted the protests by investors at Evergrande’s headquarters in Shenzhen in 2021.
Evergrande is currently grappling with a massive debt burden, making it the world’s most indebted real estate developer. This financial crisis has put immense pressure on China’s property market and has raised concerns about the country’s economic growth.
To avoid defaulting on its staggering $340 billion debt, Evergrande is undergoing a restructuring plan. This plan includes selling off assets and seeking financial support. In September, China’s national financial regulator approved the takeover of Evergrande’s life insurance arm by a new state-owned entity as part of these restructuring efforts.
The ongoing debt defaults in China’s property sector have resulted in numerous unfinished apartment buildings and frustrated homebuyers. This real estate crisis has not only hampered China’s economy but also raised concerns about its impact on the global economy.
However, despite the challenges, Chinese government officials expressed confidence in the country’s economic outlook during a recent news conference in Beijing. They maintained key interest rates and pointed to improvements in certain sectors such as services. This optimistic tone contradicted forecasts by international organizations like the Asian Development Bank and the Organization for Economic Cooperation and Development, which project a further slowdown in China’s economy, negatively impacting global and regional growth.
Cong Liang, vice chairman of China’s National Development and Reform Commission, acknowledged the challenges of reviving growth but emphasized the government’s determination to ensure that the slowdown is temporary. He highlighted the effectiveness of the party Central Committee’s decision-making and macro-control policies in guiding the economy.
China’s leaders, including President Xi Jinping, have emphasized the need for maintaining steady progress and patience in guiding the country’s economic recovery. Xi Jinping also criticized the pursuit of material wealth in the West, suggesting that it has led to “spiritual poverty.” Nevertheless, the Chinese government has implemented measures to boost economic growth by encouraging spending and investment, such as reducing reserve requirements for banks and relaxing real estate transaction restrictions in smaller cities.
As Evergrande’s problems persist, China’s authorities are closely monitoring the situation to mitigate potential risks to the country’s financial system. The fate of Evergrande and its impact on the broader economy will continue to be closely watched by both domestic and international observers.