>>>

A Bubble Burst
in China?

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The biggest real estate developer in

China, a global Fortune 500 company,

Evergrande, is staring at bankruptcy.

It has debts worth $305 billion which is

2% of China’s GDP. If it falls, it’s taking

the world down.

How did things

come to this?

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 >>>
Founded in 1996, Evergrande grew its real

estate business on the back of high

debts.

Debts came in easy in growth-hungry

China.

Infact, Evergrande is the top-most

borrower in China.

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 >>>
All this wouldn’t have been a matter of

worry if the Chinese regulators would

have kept the tap of debts open for

them.

But they are now forcing the industry to

start paying off debts.

Evergrande also made some of

its own problems.

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 >>>
It bought a soccer team. It is building an

exquisite lotus-shaped soccer stadium at

an investment of $1.7 billion.

It got into the bottled water and Electric

Vehicle business. The EV business was

worth $87 billion until April 2021. That

too without selling a single car!

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 >>>
A few days back, the company

confessed that it was under

tremendous pressure.

If it defaulted, it could trigger a

Domino-effect.

How so?

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 >>>
More than 128 banks and 121 non-banking

institutes have lent money to Evergrande.

1.6 million properties have not been

delivered to home buyers. The share

prices of Evergrande have fallen by

80% this year itself.

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 >>>
To top it all, the company asked its own

employees to lend it money, if they

wanted to get ‘bonuses’!

China’s debt problem runs deeper

than Evergrande.

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 >>>
In the next 12 months itself, Chinese

corporates have to repay debts worth

$1.3 trillion.

More than 2,00,000 companies

declared bankruptcy in the initial

months of 2020.

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The tragedy of the situation is that
the demon of debts has been raised
and unleashed by the Chinese
government itself.

How?

Follow us to find out!

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