Chinese real estate group Evergrande faces financial collapse. With a debt mountain equivalent to more than $260 billion, the company is technically broke and has debts to a variety of international banks, including HSBC. These banks are now forced to write down up to $197 billion and are seeking solutions to contain the fallout from the insolvency.
The crisis surrounding Evergrande, which was once one of China’s largest real estate companies, is having an impact on the Chinese financial market and the global economy. Experts warn of a chain reaction that could spread to other Chinese companies and trigger an unstable financial system.
Evergrande’s bankruptcy will also have a significant impact on the Chinese government, which is already struggling with large debts and struggling to maintain economic growth. Evergrande’s insolvency could lead to a loss of investor confidence in China and undermine confidence in the Chinese economy.
Evergrande’s bankruptcy is an example of the risks associated with high levels of corporate debt and the growth of shadow banks in China. It remains to be seen how the government and international community will respond to these developments.
Background
Evergrande, China’s second largest real estate developer, is on the verge of collapse. The company is technically bankrupt and has accumulated $305 billion in debt. Evergrande is one of the largest debtors in China, putting international banks like HSBC and other creditors in trouble as well.