Turmoil in China’s housing market, coupled with weak consumer sentiment, is weighing on the nation’s economy. Once the country’s largest property developer, Evergrande is now facing a lawsuit that may end with its liquidation, while Dalian Wanda Group, China’s largest mall operator, is shedding assets in an effort to avoid a default.
Debt-laden local governments are also struggling in the world’s second-largest economy. How will Beijing resolve its debt mess? Here is a selection of stories that will help you catch up on the latest.
Credit rating agencies are cautioning against China’s hidden debt. This week, Moody’s Investors Service downgraded China’s credit rating while also signaling the possibility that it may do the same for dozens of local government financing vehicles (LGFVs) funding infrastructure projects, as well as for state-owned banks. Read more.
The Hong Kong High Court declared an adjournment in China Evergrande Group’s winding-up petition hearing once again on Dec. 4.
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China Evergrande Group’s winding-up petition hearing was postponed once again by a Hong Kong court. The indebted property developer must work on its restructuring plan before facing its creditors at its next hearing on Jan. 29. Read more.
A housing exhibition in Guangzhou: Property buyers in the country are increasingly wary of developers who could renege on their promises. (Photo by Iori Kawate)
Presale properties are taking a hit in China as homebuyers fear that financially distressed developers will not be able to deliver despite upfront payments. The share of presale properties between January and October this year slumped to the lowest point since 2017. Read more.
A completed but empty 86-story office tower looms over the northeastern Chinese city of Dalian. (Photo by Kohei Fujimura)
“The myth of rising prices has been completely destroyed,” laments one real estate consultant in the southeastern Chinese city of Guangzhou. With the help of big price cuts, real estate agents are trying to ease their immediate cash flow problems. But local governments are reluctant to let prices fall. Read more.
Chinese President Xi Jinping’s administration is desperate to change the China-cratering narrative dominating global media coverage.
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Chinese President Xi Jinping’s inner circle “is desperate to change the China-cratering narrative dominating global media coverage,” writes William Pesek. But while Team Xi tries to reassure investors and repair the real estate sector, “muddying the reform process with endless bailouts, marshaling new waves of bank credit and top-down government spin will only allow China’s default nightmare to fester,” he argues. Read more.
