Two years after Chinese property giant Evergrande defaulted on its debt, Chinese policymakers are struggling to come up with ways to stem the worsening real estate crisis.
Two years after China Evergrande, the world’s most debt-saddled property behemoth, defaulted on its debts, Chinese authorities are still struggling to come up with coherent policies to arrest the deepening crisis in theIndeed, their often ham-fisted response to the crisis is only exacerbating the problems roiling the country’s real estate industry, which accounts for roughly a quarter of China’s economic activity.
There’s little doubt this policy has kept prices relatively steady, with prices of new homes falling by a very modest 0.2 per cent over the year to August, while those of existing homes are down 2.4 per cent. This slump in property sales has occurred even though ingenious property developers have been offering major incentives – ranging from electric cars to gold bars – to lure potential apartment buyers.
Meanwhile, the growing stock of unsold apartments is adding to the widespread pessimism about the Chinese property market. Meanwhile, Chinese regulators have greatly complicated Evergrande’s efforts to restructure more than $US300 billion in debt with their decision to investigate the company’s mainland business Hengda Real Estate.
Later that same day, Evergrande confirmed in a filing with the Hong Kong Stock Exchange that its billionaire chairman, Hui Ka Yan, who founded the property giant back in 1996, had been “subject to mandatory measures” by the authorities on suspicion of “illegal crimes”.
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