In the latest twist of China’s ongoing real estate saga, police in a southern Chinese city have detained staff from the wealth management unit of China Evergreen Group, the world’s most heavily indebted property developer. The Shenzhen police’s statement released on Saturday did not clarify who among the staff were detained, although the name ‘Du’ was mentioned. This comes amid media reports of investor protests at Evergrande’s headquarters last year, with a ‘Du Liang’ named as the head of the company’s wealth management unit.
Evergrande, sitting at the heart of China’s property market crisis, is currently facing an uphill battle to manage its colossal $340 billion debt, which is threatening to further slow the country’s economic growth. The company has embarked on a restructuring plan, including offloading assets, in a bid to stave off default. Adding to the complexities, China’s national financial regulator on Friday approved the takeover of Evergrande’s life insurance arm by a new state-owned entity. This move comes as a series of debt defaults in China’s vast property sector since 2021 have resulted in half-completed apartment buildings and disgruntled homebuyers, fueling fears of a potential global economic spillover.
Evergrande Staff Detained Amidst Ongoing Debt Crisis
Police in Shenzhen, southern China, have detained staff from the wealth management unit of China Evergrande Group. This recent development adds to the mounting troubles of the world’s most indebted real estate developer.
Authorities Take Action
In a statement released on Saturday, Shenzhen police announced they had "taken criminal coercive measures against suspects including Du and others in the financial wealth management (Shenzhen) company under Evergrande Group." The identity of Du remains uncertain, but media reports from last year’s investor protests at Evergrande’s headquarters in Shenzhen named a Du Liang as the head of the company’s wealth management unit. Evergrande has yet to comment on the situation.
Evergrande’s Debt Struggles
Evergrande sits at the heart of a property market crisis that is negatively impacting China’s economic growth. The group is currently implementing a restructuring plan, which includes offloading assets, in a bid to avoid defaulting on its staggering $340 billion debt.
Regulatory Interventions
China’s national financial regulator has approved the takeover of Evergrande’s life insurance arm by a new state-owned entity. This move was announced on Friday, a day before the latest police action.
Since 2021, a string of debt defaults in China’s vast property sector has resulted in half-finished apartment buildings and disgruntled homebuyers. Observers worry that the ongoing real estate crisis may slow down the world’s second-largest economy further and have global repercussions.
Takeaways
The detainment of Evergrande’s staff by Shenzhen police underscores the severity of the company’s debt crisis. As the world’s most indebted real estate developer, Evergrande’s financial struggles could potentially impact the global economy. The Chinese authorities’ intervention suggests a possible attempt to control the fall-out and prevent further economic disruption. However, the full extent of the crisis and its impact on China’s economy and the global financial scene remains to be seen.
