(Bloomberg) — Protests intensify at China Evergrande Group offices across the country as the developer falls further behind on promises to more than 70,000 investors. Construction of unfinished properties with enough floor space to cover three-fourths of Manhattan grinds to a halt, leaving more than a million homebuyers in limbo.
Fire sales pummel an already shaky real estate market, squeezing other developers and rippling through a supply chain that accounts for more than a quarter of Chinese economic output. Covid-weary consumers retrench even further, and the risk of popular discontent rises during a politically sensitive transition period for President Xi Jinping. Credit-market stress spreads from lower-rated property companies to stronger peers and banks. Global investors who bought $527 billion of Chinese stocks and bonds in the 15 months through June begin to sell.
While it’s impossible to know for sure what would happen if Beijing allows Evergrande’s downward spiral to continue unabated, China watchers are gaming out worst-case scenarios as they contemplate how much pain the Communist Party is willing to tolerate. Pressure to intervene is growing as signs of financial contagion increase.
#Evergrande collapsing – because of debt! This is a picture of what is happening in the general economy. LIQUIDITY CANNOT SOLVE SOLVENCY PROBLEMS. Same for economy! t.co/ZSHaOBer4q
— Henrik Zeberg (@HenrikZeberg) September 17, 2021
@Neloangelo314 Evergrande HQ bring raided by police the 💩 is hitting the fan.pic.twitter.com/tBvnSpQ7iT
— David Evans 🌸 (@Djevans71) September 16, 2021
China's 2nd largest real estate developer just defaulted.
Debt crossed $600B USD
Note: Lehman was liquidated for $600B, also owned by many international banks. Ripple effect soon to come.
TRADE: short RMB because likely China will devalue its currency to bail out Evergrande. t.co/WNR6IGPPdH
— Ming Zhao (@FabiusMercurius) September 15, 2021
There are pockets of contagion in Chinese markets from Evergrande's swoon. The property developer's woes exacerbate an already softening housing market, which accounts for 28% of China's economy. t.co/fmveJ3JUWK pic.twitter.com/8ByYzmhyC1
— Lisa Abramowicz (@lisaabramowicz1) September 16, 2021
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