Cranes have stopped moving and major construction projects are frozen, shattering confidence in China’s housing market.
Photos show cranes lying idle in construction projects from China’s Yunnan province to Shanghai.
The building is at a standstill.
The images symbolize China’s growing problem. The real estate boom that got worse.
There are millions of unfinished apartments in China.
China’s crisis is being linked to the fortunes of China Evergrande Group – the most indebted real estate company in the world, with more than $418 billion on the books.
The company is a giant in China. It has approximately 200,000 employees and owns more than 1300 developments in over 280 cities.
Last week, Fitch Ratings announced the company Bond debt defaulted for the first time over $1.2 billion,
But Evergrande isn’t the only company with huge debt.
Many smaller companies used the same business model – borrowing heavily and asking buyers to pay upfront for off-plan properties.
According to reports, Cassa Group Holdings Limited and Tahoe Group Company are also struggling.
At the peak of the boom, about 90 percent of homes in China were already sold, bloomberg Report.
Evergrande’s strategy of high debt, high leverage and high turnover, coupled with low costs, led to massive growth. Strong demand for steel helped Australia’s iron ore trade Reach the heights of the stratosphere.
But debt mounted and Chinese regulators broke down.
Last year China introduced a new set of rules, known as the “three red lines”, defining strict credit limit To curb the growing debt of the sector.
This helped push China’s debt-ridden real estate companies to the brink.
The Chinese government looks forward to seeing many of these unfinished projects come to fruition.
But it is clear that confidence in China’s once booming housing market has been shattered.
And with real estate making up about 30 percent of GDP, this is bad new for China’s economy.
Evergrande’s billionaire chairman Xu Jian has hit his personal finances.
According to the filing, he was forced to sell 277.8 million shares by a third party with whom he had pledged shares. Hong Kong Stock Exchange,
The shares were valued at approximately $89.76 million, according to Bloomberg Count,
According to the disclosure, the forced sale reduced the billionaire’s stake in Evergrande from 61.88 percent to 59.78 percent.
And there’s no bailout for Evergrande on the horizon.
Regulators are concerned about the moral hazard of a bailout and insist that Evergrande’s problems will not affect the financial system.