Evergrande
Police are not filing charges against arrested workers but are urging the public to report any suspected fraud
Agence France Presse
Monday 18 September 2023 12.44am BST
Police in China have arrested several employees of a subsidiary of Evergrande, the troubled real estate giant that is struggling with hundreds of billions of dollars in debt.
Employees of Evergrande’s financial subsidiary, Evergrande Wealth Management, were arrested, police in the southern city of Shenzhen said in a statement, without specifying the number of employees or the charges against them.
In the statement, police also urged the public to report any suspected fraud to the authorities.
The real estate crisis in China is worsening as the project developer Country Garden is threatened with default
Evergrande’s huge debt has helped worsen the country’s real estate crisis and raised fears of global spillover.
The real estate sector, which, alongside construction, accounts for around a quarter of China’s GDP, is an important pillar of the country’s growth and has experienced a rapid boom in recent decades.
But the enormous debt of the industry’s biggest players – Evergrande had an estimated debt of $328 billion (307 billion euros) at the end of June – has been seen by Beijing in recent years as an unacceptable risk to China’s financial system and overall economic health.
Since 2020, authorities have gradually tightened developers’ access to credit, which has been followed by a wave of defaults – notably Evergrande’s.
Another Chinese real estate giant, Country Garden, narrowly avoided default in recent months after reporting a record loss and debts of more than $150 billion.
State-backed developer Sino-Ocean is the latest company to show signs of trouble. On Friday it announced it would suspend payments on offshore debt.
Meanwhile, ratings agency Moody’s recently downgraded the outlook for China’s real estate sector from “stable” to “negative,” arguing that government support measures will only have a short-term impact.
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