When China Guangfa Bank Co successfully applied to freeze $20 million in bank deposits and assets associated with China Evergrande, it was big news in the boardrooms, offices and around the water coolers at major financial institutions globally.
At face value this may seem strange – $20 million is just a drop in the ocean for one of the world’s biggest property developers. However, for months concern had been mounting about Evergrande’s spiralling debts.
That decision made by a court in China’s Jiangsu province was handed down in July 2021 and the matter (involving money owed by an Evergrande subsidiary) was resolved just days later. But since, Evergrande’s astronomical debt burden has continued to unravel and many fear the ripple effects could spread globally. Some have even suggest it could be the catalyst for another subprime-style crisis.
Who is China Evergrande?
China Evergrande cranes dominate the skylines of many Chinese cities. The company develops and manages real estate across China, primarily focussing on residential apartment complexes. According to the company website, Evergrande Real Estate owns more than 1300 projects in over 280 Chinese cities.
It is the second-largest property developer in China and ranks amongst the top 150 companies in the world based on revenue. According to Fortune 500, the company has over 123,000 employees, and posted total revenues of $73.5 billion in 2020.
Alongside its enormous property development and management operations, Evergrande has also made investments into other sectors such as electric vehicles, internet and healthcare businesses.
The company was founded by billionaire businessman Xu Jiayin in 1996. He is ranked by Forbes as the third-richest person in China and the 31st richest man in the world.
Xu Jiayin, 62, announced his resignation as Chairman of Evergrande Real Estate Group on Tuesday, August 17 2021.