Friday 29 July 2022

China: Two senior Evergrande officials step down after loan-diverting probe

WION on Youtube shows that China Evergrande Group said that its chief executive officer and finance head have resigned after a preliminary probe found their involvement in diverting loans.

The China Evergrande Group is the second largest property developer in China by sales. It is ranked 122nd on the Fortune Global 500. It is incorporated in the Cayman Islands, a British Overseas Territory, and headquartered in the Houhai Financial Center in Nanshan District, Shenzhen, Guangdong Province, China. It was founded in 1996 by Xu Jiayin. It sells apartments mostly to upper- and middle-income dwellers. In 2018, it became the most valuable real estate company in the whole world.

In 2021, the payments Evergrande had to make on its debt started the 2020-2022 Chinese property sector crisis; Evergrande's total debts were estimated in the hundreds of billions of dollars. This was one of the reasons for a drop in many stock market indices on September 20, 2021. At the end of 2021, the Chinese government was reportedly working to restructure Evergrande in order to resolve the crisis. The group also sought a moratorium on the early repayment option on one of its yuan-denominated bonds from its bondholders on 7 January 2022.

In April 2022, Reuters reported that construction had been started again at many projects and that the company still had liabilities of US$300 billion.

The company's operations and business interests are interesting in the field of real estate.

Evergrande Group owns 565 million square meters (6,080 million square feet) of development land and real estate projects in 22 cities, including Guangzhou, Tianjin, Shenyang, Wuhan, Kunming, Chengdu, Chongqing, Nanjing, Zhengzhou, Luoyang, Changsha, Nanning, Xian, Taiyuan and Guiyang in Mainland China. Notable projects by the company include Ocean Flower Island in Hainan.

Evergrande Real Estate is the second-largest real estate developer in Mainland China. It is known as so-called "Wan Heng Bi" with the other two top three real estate companies: Vanke (Wanke) and Country Garden (Biguiyuan). The firm has developed projects in over 170 cities in Mainland China.

The beautiful Evergrande Plaza (in Chengdu) was certainly designed by Aedas. It was completed in 2014.

The so-called 2020-2022 Chinese property sector crisis is a current financial crisis sparked by the financial difficulties of Evergrande Group and other Chinese property developers, in the wake of new Chinese regulations on these companies' debt limits. The crisis spread beyond Evergrande in 2021, however, and also affected such major important property developers as Kaisa Group, Fantasia Holdings, Sunac, Sinic Holdings, and Modern Land.

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