By our economics editors
04 dec 2023 om 10:54
The Chinese real estate group Evergrande has unexpectedly been given longer time to come up with a rescue plan. One of the creditors has withdrawn its request for immediate liquidation.
The judge in Hong Kong on Monday postponed the deadline for Evergrande to January 29. That gives Evergrande more time to save its skin.
The company ran into problems at the end of 2021 due to high debts. A bankruptcy could send shockwaves through the financial markets. Evergrande has therefore become the symbol of the real estate crisis in China.
The group is now working to reach an agreement with creditors from several countries about cleaning up its finances. There was a hurry. Earlier, the same judge in Hong Kong stated that Monday would really be the last chance for Evergrande to submit a concrete proposal.
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Evergrande has hundreds of billions of dollars in debt. If it is not possible to convince the judge, an order will probably be issued to dismantle the company.
Investors in China reacted happily to the news that the group will have a little more time. The stock rose about a tenth on the Hong Kong stock exchange on Monday.
In the judge’s opinion, Evergrande should “engage in more direct consultation with the relevant authorities”. This is to show that plans that are made are actually feasible. “It’s not just about creditors in court,” she stated.
Flats are not finished
China’s construction and real estate sector once accounted for about a quarter of the country’s economy. But Chinese President Xi Jinping decided several years ago that the debts of Evergrande and other real estate companies posed an unacceptable risk to the Chinese financial system. Authorities then started tightening regulations for the sector.
In recent years, more large real estate companies, such as Country Garden, have run into problems due to their large debt burden. The fear of a real estate bubble has not disappeared yet. China is still full of empty, unsellable or never finished flats.
Image: Future Publishing
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