Recently Yahoo News reported the following:
China Evergrande is ordered to liquidate, with over $300
billion in debt. Here's what that means.
The Canadian Press
Mon, January 29, 2024 at 3:16 a.m. PST·2 min read
A court in Hong Kong on Monday ordered China Evergrande to
be liquidated in a decision that marks a milestone in China's efforts to
resolve a crisis in its property industry that has rattled financial markets
and dragged on the entire economy. Here's what happened and what it means,
looking ahead.
WHAT IS CHINA EVERGRANDE?
Evergrande, founded in the mid-1990s by Hui Ka Yan (also known as Xu Jiayin), it is the world’s most deeply indebted developer with more than $300 billion in liabilities and $240 billion in assets. The company has operations sprawling other industries including electric vehicles and property services, with about 90% of its assets on the Chinese mainland.
WHY IS EVERGRANDE IN TROUBLE?
Hong Kong High Court Judge Linda Chan ordered the company to be liquidated because it is insolvent and unable to repay its debts. The ruling came 19 months after creditors petitioned the court for help and after last-minute talks on a restructuring plan failed. Evergrande is the best known of scores of developers that have defaulted on debts after Chinese regulators cracked down on excessive borrowing in the property industry in 2020. Unable to obtain financing, their vast obligations to creditors and customers became unsustainable. Hui has been detained in China since late September, adding to the company's woes.
WHY DOES EVERGRANDE'S PREDICAMENT MATTER?
The real estate sector accounts for more than a quarter of all business activity in China and the debt crisis has hamstrung the economy, squeezing all sorts of other industries including construction, materials, home furnishings and others. Falling housing prices have unnerved Chinese home owners, leaving them worse off and pinching their pennies. A drop in land sales to developers is starving local governments of tax and other revenues, causing their debt levels to rise. None of these developments are likely to reassure jittery investors. The health of China's huge economy, the world's second-largest, has an outsized impact on global financial markets and on demand for energy and manufactured goods.
WHAT HAPPENS NEXT?
Much depends on the extent that courts and other authorities in the communist-ruled Chinese mainland respect the Hong Kong court's decision. The court is appointing liquidators who will be in charge of selling off Evergrande's assets to repay the money it owes. As is typical, only a fraction of the value of the debt is likely to be recovered. In the meantime, Evergrande has said it is focused on delivering apartments that it has promised to thousands of buyers but has not yet delivered.
Translation
香港一家法院週一下令對中國恆大進行清盤，這一決定標誌著中國解決房地產業危機的里程碑，這場危機擾亂了金融市場並拖累了整個經濟。 展望未來，以下就是發生的事情及其意義。
什麼是中國恆大？
恆大集團由 Hui Ka Yan（又稱許家印）於1990年代中期創立，是全球負債最重的開發商，負債超過3,000億美元，資產超過2,400億美元。 該公司業務遍及電動車和物業服務等其他行業，約90%的資產位於中國大陸。
恆大為何陷入困境？
香港高等法院法官 Linda Chan 下令對該公司進行清盤，因為該公司資不抵債且無法償還債務。 該裁決是在債權人向法院請求幫助的19 個月之後, 且在重整計畫的談判最後一刻失敗後之做出的。 2020年中國監管機構嚴厲打擊房地產業過度借貸行為後，恆大是數十家債務違約開發商中最著名的。由於無法獲得融資，他們對債權人和客戶的巨額債務變得無法不支撐。 自九月下旬以來，許先生一直在中國被拘留，這加劇了該公司的困境。
為什麼恆大的困境有很大影響？
房地產行業佔中國所有商業活動的四分之一以上，債務危機阻礙了經濟發展，擠壓了建築、材料、家居等各種其他行業。 房價下跌讓中國房主感到不安，讓他們的生活變得更加糟糕，要精打細算。 開發商土地銷售的下降也導致地方政府的稅收和其他收入匱乏，令其債務水平上升。 這些進展都不可能讓緊張不安的投資人放心。 作為世界第二大經濟體，中國龐大經濟的健康狀況對全球金融市場以及能源和製成品的需求產生巨大影響。
接下來發生什麼事？
這取決於共產黨統治的中國大陸法院和其他權力機構會尊重香港法院裁決的程度。 法院正在任命清盤人，負責變賣恆大資產以償還欠款。 通常情況下，只有一小部分的債務價值能被取回。 同時，恆大集團表示，其重點是向數千名買家去交付已經承諾的住房。
So, the health of
China's huge economy has a great impact on global financial markets, on demand
for energy, and on manufactured goods. Let’s see how China will deal with this
challenge.
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