Evergrande has been in serious financial trouble for some time now. The company has around 260 billion euros in debt, making it one of the highest debt mountain in the world.
Earlier this week it became clear that the payment of interest – normally on September 20 – will be difficult. Also, it has not been possible for some time to get rid of possessions and several projects of the company have come to a standstill, so that Evergrande cannot earn from it either.
Last week, just over 100 angry shareholders of the company protested in the street, very unusual for China. “We want our money back”, was one of the slogans. It also rained furious reactions on social media.
Since the beginning of this year, the stock market value of the real estate group, which has more than 800 projects in progress in 280 cities, has plummeted by 75 percent. Investors fear bankruptcy, which could have a knock-on effect on the Chinese economy and beyond. Because international financial institutions also lent money to the group.
The Chinese economy may be less financially intertwined than the US with that of the world, yet a global impact cannot be underestimated, Our editors wrote on this website before. Problems in the world’s second economy cannot but have a global effect. Especially now that the global economy is starting to climb out of the trough of the corona pandemic, a new crisis is not desirable.